RCS - Distribution Finance - Progressive publishes new research
RNS Number : 7415EDistribution Finance Cap. Hldgs PLC09 July 2021
Significant loan origination to continue
DF Capital's (DFC) recent Q2 trading update reported that the Group saw very strong new business originations over the quarter while arrears levels remained favourable. Dealer loan facilities were also at a robust level. Market dynamics which reflected record sales for many of DFC's customers also included an accelerated stock turn and subsequent delays to stock replenishment. The nub of this environment is that DFC's loan book reduced to £166m by the end of Q2 from £193m at the end of Q1. As manufacturers work through delivery delays, DFC expects to see 'significant' loan origination during H2. Management also reiterates its expectation of achieving monthly run-rate profitability during Q4 of FY 2021E. We adjust estimates to reflect the pattern of growth in the loan book which mainly affects FY 2021E and FY 2022E through lower anticipated average loan books during those years. Our FY 2023E numbers are substantially unchanged. Meanwhile, the outlook is one based on a supportive market backdrop with significant lending opportunities for DFC.
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