Plenti Group Limited

PLT Details

Plenti Group Limited (ASX: PLT) provides consumer loans through the application of smart technology. It also seeks to deliver stable returns to its investors via investing in the asset class of consumer loans.

Update on Q1FY22 Performance:

• The company witnessed record quarterly loan originations of $216.4 million during the quarter, reflecting an increase of ~260% on the pcp.
• The loan portfolio grew by ~96% to $757 million as compared to the pcp.
• The automotive warehouse facility increased by $100 million to $450 million, and the renewable energy and personal loan warehouse facility increased by $100 million to $200 million.

Trend in Growth of Loan Origination (Source: Analysis by Kalkine Group)

Change of Director’s Interest: As per a recent update, the company’s director Mary Ploughman has undergone a change of interest in the company and has acquired 20,000 ordinary shares for a consideration of $24,021.01.

Key Risks: The company’s line of business exposes it to the risk of defaults from the borrowers, which might have an impact on its profitability and also may affect the investor’s returns.

Oulook: As per the company, it has achieved a one-billion-dollar loan origination run-rate in June 2021, reflecting an increase in market share. It plans to achieve a one-billion-dollar loan book during the FY22 fiscal.

Valuation Methodology: Price/Cash Flow Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The company reported an increase in automotive loan origination growth, driven by investments in automotive-specific technology and product development. As per ASX, the stock of PLT is trading close to its 52-weeks’ high levels of $1.605. The stock of PLT gave a positive return of ~26.06% in the past three months and a positive return of ~21.90% in the past one month. It has a support level of $1.315 and resistance level of $1.605. We have valued the stock using a Price/CF multiple-based illustrative relative valuation and have arrived at a correction of high single-digit (in % terms). We believe that the company can trade at some premium to its peer average Price/CF (NTM trading multiple), considering the robust performance in Q1FY22, record growth in originations and an increase in the loan portfolio. For this purpose, we have taken peers such as Moneyme Ltd (ASX: MME), Zip Co Ltd (ASX: Z1P), Humm Group Ltd (ASX: HUM), to name a few. Considering the current high trading levels, recent rally in the stock price, muted ROE performance and the key risks associated with the business, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $1.575, up by ~4.30% (as on 14 July 2021, 11:02 AM (GMT+10), Sydney, Eastern Australia).

PLT Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

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