Dolla Financial an attractive performer

Supreme Ventures (SVL) recently informed investors of purchasing a 15 percent shareholding in the fast-growing Junior Market listed company – Dolla Financial Services.
According to SVL, the acquisition continues to align with SVL’s growth strategy, which has expanded beyond the gaming market and has been making headway into other growth industries with significant potential to meet the ever-growing needs of an eclectic consumer base.
The purchase is a high profile one, with Dollar Financial reporting second quarter profit of $105 million, a robust 78 percent increase over the $59 million in the June 2022 quarter as it pumped up profit by a solid 91 percent to $227 million for the six months to June, versus $119 million in 2022.
Dolla recorded total income for the six months to June 2023 of $592 million, an increase of 98 percent over the $298 million for the six months to June 2022. Fees and other income brought in $13 million for the quarter, up from just $4 in the June 2022 quarter and $26 million for the half year, from $4 million in 2022.
Net interest income, before expected credit losses, rose 69 percent to $242 million in the June Quarter, up from $143 million in 2022 and for the six months to $490 million, reflecting a growth of 80 percent over $272 million generated in the prior year, driven by loan expansion.
The period shows a small amount set aside for expected credit losses, but the cash flow indicates only 75 percent of interest earned was collected during the period, down from 77 percent for 2022 wit, with the first half coming in at 80 percent for the 2022 full year.
The company indicates that some 80 percent of loans made are collateralized. As such, they may not need to provide for all late payers as it could well recover some from the disposal of collaterals held against loans granted.
Operating expenses almost doubled in the June quarter to $144 million from $77 million and rose 97 percent to $270 million from $137 million for the six months. The company stated that the increased cost is “primarily due to intensified marketing efforts and increased staff capacity.”
Earnings per share ended at 4 cents in the latest quarter and 9 cents year to date and is expected to exceed 30 cents for the year. The stock trades around $2.65 and above, an attractive entry point for medium term investment over a year.
Loans receivable net of expected credit losses reached $2.57 billion, representing a substantial increase of $1.5 billion, a 145 percent surge from $1.05 billion as of June 2022 and is also up over the $2.27 billion at the end of March this year. Business loans accounted for 81 percent of the total loan portfolio, with personal loans accounting for the rest, the company reported. Secured loans constituted 80 percent of the portfolio, with unsecured loans making up the remainder.
Loans payable increased to $1.7 billion from $430 million at the close of June 2022 and Shareholders’ Equity climbed to $900 million from $653 million at the end of June 2022.
At the end of June, cash resources stood at just $111 million, not a great deal to fund increased lending, but continued profitability will add to the amounts they can lend. Going forward, increased profitability and access to loan funding to facilitate rapid increased lending will be critical to the rapid profit growth.