Morningstar says Australia's Humm will survive near-term operating challenges

Humm

20/06/2022 22:11

** Analysts at Morningstar cut their fair value estimate for
Australia's finance provider Humm Group  HUM.AX  to A$0.85 per
share from A$1.40
    ** Australian digital payment and lending firm Latitude
Group Holdings  LFS.AX  last week terminated its A$335 mln
($235.97 mln) offer to buy HUM's consumer unit that includes its
buy now, pay later (BNPL) business  urn:newsml:reuters.com:*:nL4N2Y33IF
    ** Co also said Humm Consumer Finance (HCF) saw a 61%
year-on-year plunge in year-to-date cash net profit after tax at
the end of May
    ** Morningstar notes that bearish rhetoric from HUM's board
on HCF suggests its near-term prospects are difficult and
forecasts higher operating expenses for HUM 
    ** Says sentiment on consumer financing stocks, especially
buy-now-pay-later stocks, have fallen, but BNPL as a payment
method is likely to continue being adopted
    ** Morningstar believes HUM can weather its near-term
challenges and that its pivot to financing big-ticket items,
where competition is relatively limited, will likely continue
    ** Adds it won't rule out the potential for Latitude to make
another attempt to buy HCF in future
    ** The two analysts covering the stock rate it "buy"; their
median PT is A$1.18 - Refinitiv data
    ** As of last close, stock is down 44.4% this year

 (Reporting by Himanshi Akhand in Bengaluru, editing by Deepa
Babington)
 ((Himanshi.Akhand@thomsonreuters.com;))