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CCV 
Cash Converters International 
ASX

CCV H1 FY2025 Results Investor Presentation

Sentiment:
 Investor Presentation
 23 February 2025 4:02 PM

Cash Converters International Limited reports strong 1H25 financial results driven by strategic initiatives, including franchise acquisitions and improved credit quality, leading to increased profitability and earnings growth.

Better than expected
  The company's Operating EBITDA and NPAT increased significantly compared to the previous corresponding period.  The net loss rate decreased, indicating improved credit quality and risk management. 

Summary
  • Cash Converters International Limited reported a revenue of $192.1 million in 1H25, a slight increase of 0.3% compared to $191.5 million in 1H24.
  • Operating EBITDA increased by 12% to $36.5 million, up from $32.6 million in the previous corresponding period.
  • Operating NPAT rose by 24% to $12.2 million, compared to $9.8 million in 1H24.
  • The company's net loss rate improved to 7.3%, a 19% decrease from 9.0% in 1H24.
  • Cash and equivalents increased slightly to $57.3 million, a 2% rise from $56.3 million at the end of FY24.
  • The gross loan book decreased by 5% to $274.4 million, down from $288.0 million at the end of FY24, reflecting the transition away from Small and Vehicle Loans.
  • The company declared a 1.0c dividend for 1H25.
  • The company acquired 47 UK stores in FY24 and 12 Australian stores since FY21.
  • The company is in active discussions with franchisees regarding the acquisition of approximately 30 franchise stores.
Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic growth initiatives, and improved credit quality. The company's focus on sustainability and customer experience further enhances the positive sentiment.

Positives
  • Strong growth in Operating EBITDA and NPAT indicates improved profitability.
  • The reduction in the net loss rate demonstrates improved credit quality and risk management.
  • Increased cash and cash equivalents provide financial flexibility for future growth initiatives.
  • Strategic franchise store acquisitions are expanding the company's store network and revenue base.
  • The launch of a new luxury retail store concept is showing positive customer feedback.
  • The company is transitioning to longer-term, lower-cost lending solutions.
Negatives
  • The gross loan book decreased by 5%, reflecting the transition away from Small and Vehicle Loans, which may impact short-term revenue.
  • Regulatory changes impacting Small Loans has introduced complexity in servicing customer needs.
Risks
  • The transition away from Small and Vehicle Loans could impact revenue if not managed effectively.
  • Regulatory changes impacting Small Loans has introduced complexity in servicing customer needs.
  • The company faces competition in the lending and retail sectors.
  • The company's success depends on its ability to effectively manage credit risk and maintain credit quality.
Future Outlook

The company aims to drive earnings growth and shareholder returns by scaling a sustainable loan book, optimising and strengthening its market position, and expanding its luxury retail footprint.

Management Comments
  • The company is transitioning to longer-term, lower-cost lending solutions, delivering sustainable growth.
  • The company is leveraging proprietary machine learning credit risk models to process loan applications.
  • The company is prioritising franchise store opportunities in Australia and the UK.
Industry Context

Cash Converters operates in the financial services and retail sectors, providing lending and retail solutions to customers. The company's focus on franchise acquisitions and luxury retail aligns with trends in the retail industry, while its lending operations are subject to regulatory oversight and competition from other financial institutions.

Comparison to Industry Standards
  • Cash Converters' focus on sub-prime and near-prime customers is similar to other non-bank lenders such as Money3 Corporation.
  • The company's expansion through franchise acquisitions is a common strategy in the retail industry, similar to companies like Domino's Pizza Enterprises.
  • The company's shift towards luxury retail is comparable to other retailers that are focusing on high-value inventory and customer experience, such as Tiffany & Co.
Stakeholder Impact
  • Shareholders will benefit from increased profitability and potential for higher returns.
  • Employees may experience growth opportunities as the company expands its operations.
  • Customers will have access to a wider range of lending and retail solutions.
  • Suppliers may see increased demand for their products and services.
  • Creditors may view the company as a lower-risk borrower due to its improved financial performance.
Next Steps
  • Continue acquiring franchise stores in Australia and the UK.
  • Scale a sustainable loan book by optimising marketing and investing in digital channels.
  • Expand the luxury retail footprint using AI-enabled authentication.
  • Explore new funding partnerships to accelerate growth.
Key Dates
  • FY21: Start of franchise store acquisitions, with 12 AUS stores acquired since then.
  • early-2023: Line of Credit (LOC) loan product launched.
  • Jun-23: Small Loan Book at $78m.
  • Dec-23: Vehicle Loans Book at $74m.
  • Jun-24: Ceased Vehicle Loans.
  • Aug-24: Bondi Junction luxury retail store opened.
  • 31-Dec-24: End of 1H25 reporting period.
  • 24 February 2025: Date of the investor presentation.
Keywords
Cash Converters, Financial Results, Franchise Acquisitions, Lending, Retail, EBITDA, NPAT, Loan Book, Luxury Retail
CCV 
Cash Converters International 
ASX
Sector: Financial Services
 
Filings with Classifications
Better than expected
1 June 2025 6:19 PM
Strategic Acquisition and Funding Announcement
  • The company secured a new 12 million pound growth funding facility with attractive bank rate pricing and terms.
  • The acquisition of 10 UK franchise stores for 7.5 million pounds is expected to be earnings accretive.
Better than expected
23 February 2025 4:02 PM
Investor Presentation
  • The company's Operating EBITDA and NPAT increased significantly compared to the previous corresponding period.
  • The net loss rate decreased, indicating improved credit quality and risk management.
Better than expected
23 February 2025 4:02 PM
Half-Year Trading Update
  • The company's operating NPAT increased by 24%, indicating improved profitability.
  • Australian store profit before tax was up 60% and the UK was up 4%.
Better than expected
6 November 2024 6:26 PM
Annual Report
  • The reported revenue and EBITDA significantly exceeded expectations, driven by strong loan book growth and successful store acquisitions.
Better than expected
28 October 2024 5:01 PM
Investor Presentation
  • Revenue and EBITDA exceeded expectations due to successful store acquisitions and a shift towards higher-quality lending.
Better than expected
27 October 2024 5:19 PM
Quarterly Trading Update
  • Revenue exceeded expectations with a 1% increase year-on-year, driven by strong performance in both the UK and Australian markets.
  • The net loss rate significantly decreased to 3.7%, exceeding expectations and demonstrating the effectiveness of the company's credit risk models.

Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.