Thorn Group Ltd

TGA Details
·         Weak guidance impacted the stock sentiment: Thorn Group Ltd (ASX: TGA) stock lost over 5.98% on March 21, 2017 given their ongoing investigations by Australian Securities and Investments Commission (ASIC) and weak guidance. ASIC is investigating into the responsible lending obligations of the Company’s consumer leasing division, Radio Rentals. The group is making a further provision with a $4 million profit after tax impact in its financial statements for the year ending 31 March 2017. Moreover, the group forecasts its net profit after tax for the financial year ending 31 March 2017 to be in the range of $24 million to $26 million.
 
·         Recommendation: TGA stock already lost over 10.5% in the last three months (as at March 20, 2017). Despite facing pressure, the group is investing in the Radio Rentals store network with several stores relocating under the new RR format into popular high footfall shopping Centre locations with exposure to larger consumer bases. The group is closing underperforming stores, and undertook a restructuring program which led to a cut of 53 jobs. TGA also merged its Trade & Debtor Finance Division with the Equipment Finance Division to drive efficiencies. We maintain a “Speculative Buy” on the stock at the current price of $ 1.57

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