humm®group Announces Full Year 2025 Results

• hummgroup refined Cash profit (after tax) of $52.9m

• hummgroup Cash profit (after tax) on previously reported measure of $55.1m

• Statutory profit (after tax) of $39.6m • Underlying cash flow of $41.9m

• Assets under management4 of $5.5b, up 10% - Commercial assets under management4 of $3.3b, up 12% - Consumer Finance receivables of $2.2b, up 6%

• Net Interest Margin (“NIM”) of 5.4%, down marginally by 10bps

• Net Loss/Average Net Receivables (“ANR”) maintained at historical low of 1.7%

• Cost to income ratio of 51.7%, an 11% improvement

• Cash Earnings per Share of 10.2c; Underlying cash flow per Share of 8.1c

• Return on Cash Equity (“ROCE”) of 10.0%

• Fully franked final dividend of 0.75 cents per share, taking total dividends for FY25 to 2.00 cents per share, an annualised return to shareholders of 4.8%

• Full repayment of the subordinated perpetual notes of $53.6m

• Strong balance sheet with $125.4m in unrestricted cash and $1.6b in undrawn capacity across wholesale funding facilities and the Forward Flow arrangement

In regards to a valuation

Current valuation as follows: FY NCPAT = $52.9

Million / 492m shares = $0.102 per share

I will increase my PE to 8 now that the business is

starting to turn around

So 8 x $0.102 per share gives us a valuation of $0.816

per share

But they also have about $125.4 million in unrestricted

cash which is $0.2549 per share

So $0.816 + $0.2549= $1.071 per share

I know that Humm is a dog and has been a terrible investment over the last 10 years or so as I have owned it but I believe that better times are around the corner now that they are producing a consistent profit and there is interest from other parties so this looks as though it may get a TO offer significantly more than the current price of $0.63

From AFR Street Talk -

Humm shareholder targets board forentertaining ‘lowball’ offer

Self-styledactivist Jeremy Raper has little chance of swaying the Humm Group board toreject chairman and major shareholder Andrew Abercrombie’s $268 million bid.But he’s giving it a red-hot go anyway.

Speaking toStreet Talk, private investor Jeremy Raper voiced his frustration at theindicative offer to acquire Humm at 58¢ per share, noting it landed as thecompany traded around its record lows. But his primary beef is with thethree-person independent board committee.

By givingAbercrombie due diligence, Raper says this has anchored the expected pricemeaning any increases will be tied to that offer. Rather, he would have wantedthe board to initiate a strategic review and roll out the welcome mat to otherbidders, noting Latitude has shown interest in the past.

“The onlyreason Humm is trading so low is because major shareholder Tanarra Capital hasbeen in the market selling,” he said.

“I’m notsurprised Abercrombie has been opportunistic, but I didn’t expect the board tojust roll over and give due diligence.”

Raper, aformer Goldman Sachs associate who runs his own money at Raper Capital, is asmall shareholder and is powerless to do anything but shake his fist in theboard’s direction (and hope others join him).

He ownsaround 2.5 million shares, or 0.5 per cent of the register, aggressively addingto his position after Abercrombie launched his bid last week. Of note, Humm’sthree-year volume-weighted average price over the past three years is 55¢ –below Abercrombie’s indicative offer.

Raper’sview on price is backed by Shaw and Partner’s senior analyst Larry Gandler whodescribed the offer as “below valuation” in a note to clients last week andheld his buy rating.

“We leaveour 90¢ share target price unchanged as that is supported by reasonablevaluation metrics,” Gandler wrote, estimating NTA – the value of Humm’s assetsminus liabilities (less intangible assets) – at about 85¢ per share.

“Given thelevel of the indicative offer, it’s plausible The Abercrombie Group is merelyattempting to put HUM in play. The non-bank financial sector is ripe forconsolidation.“

Ultimately,it will come down to what the big shareholders want. Aside from Abercrombie,who has a 26.7 per cent stake, Renaissance Asset Management is the only otherholder above the substantial line with 5.1 per cent. The fund manager declinedto comment.

It ishighly unlikely Abercrombie will be allowed to vote on a scheme given hisassociation. Therefore, it would need 75 per cent of those who show up to voteyes. By Gandler’s math, shareholders other than Abercrombie voting in thescheme would need 17 per cent to 18 per cent to block the transaction.

Resistanceto Abercrombie’s bid comes three years after the chair voiced strong oppositionto a $335 million bid from Latitude for Humm’s smaller consumer financebusiness. Abercrombie’s primary issue was not with the bid itself but itsmajority script component."

It looks like Abercrombie is finally going to put long-suffering shareholders out of their misery, though it is a cynical offer that won't be pleasing to a majority of shareholders.

The Abercrombie Group's non-binding indicative offer to acquire humm group limited

humm group limited (ASX:HUM) ("hummgroup") advises that after the close of market on 23 June 2025

it received a non-binding indicative offer to acquire hummgroup from The Abercrombie Group Pty Ltd

(TAG).

TAG is the family office of hummgroup Board Chair Andrew Abercrombie. TAG and its associates hold

26.6% of the shares on issue in hummgroup.

Offer price

The indicative offer is for the acquisition of all of the ordinary shares on issue in hummgroup (that are

not currently held by TAG and its associates) for a cash price of $0.581 per share (Offer) compared to a

closing price on 23 June 2025 of $0.43. TAG proposes to acquire the shares by way of a scheme of

arrangement.

Just a thought about the valuation of Humm,

They have First half Cash Earnings per Share (“EPS”) of 11.0c ,

So that is 0.22 cents per share for FY25,

They also have about $113.6 million in unrestricted cash which is $0.2309 per share,

And the current share price is $ 0.53,

So $0.53 - $0.2309 = $0.30 rounded,

And $0.30/$0.22CPS = 1.36,

So the current PE of Humm is 1.36,

Sounds like it is a good buy at the moment,

Humm's share price has moved from the middle 40's to today's high of $0.69 which is mainly due to the buy back which has been going for a few months now and has cleaned out some of the shorters/traders that have kept the price low. With some good results in the half yearly results in late February this stock could go over $1.00 quite easily as there is still significant value here.

AA the Managing Director of Humm continues to buy shares on the market and currently has approx 125 million shares which I believe shows confidence with the company and with current price around $0.42 they are quite inexpensive.and are due for a re-rate

Chairman and founder Andrew Abercrombie continues to accummulate shares on market, including over $260k declared today. Previous purchases have not caught the attention of the market.

I guess mostly reprising my short straw from a couple of weeks ago and following on from @NewbieHK and @thunderhead.  Management have, I agree, done a really solid job - just look at the turnaround in the Commercial business.  Rebecca James appears to have a gift with the branding, marketing, communications side of the business. She's compelling every time I see her speak.

The issue in BNPL though is growth and scale and maybe its my small brain and lack of visionary spirit but I just cant see a strategic pathway from where they are to scale growth in UK/Europe and North America given the competitive set they are on the field with - Apple, PayPal, Square/APT... CBA...

There has to be I think serious consolidation in the sector... perhaps the chairman sees a few offers coming his way?

I'm less worried about the debt which they seem to have a grip on than the stretch into BNPL and how that's going.  Humm seem to be another caught in the middle - a little late to the BNPL party, weighed down by legacy structure and systems internally and not able to get the growth that the BNPL hype demands.  At the same time, their commercial lending business seems to be going well.

I just can't see a path to them carving out a competitive niche when the likes of Square/APT, CBA, PayPal, Apple etc are coming after them.  They've built some good products no doubt but surely they are an acquisition in waiting?  Can't imagine they won't have to raise capital if they properly start to execute on their UK & Canada strategy.

Disc: small holding in my SMSF (waiting for an acquisition premium)

Full ASX Announcement

Some very pleasing results in the 4Q21 business update this morning:

•  hummgroup 4Q21 transaction volume of $774.9m, up 57.3% on pcp
• Record quarterly BNPL segment transaction volume of $304.9m in 4Q21, up 68.7% on pcp
• Cards (Australia and New Zealand) 4Q21 transaction volume of $287.5m, up 44.3% on pcp with spend continuing to return across key categories
• Commercial and Leasing transaction volume in 4Q21 of $182.4m, up 62.2% on pcp
• Total hummgroup customers of 2.7m as at 30 June 2021, up 19.7% on pcp
• Continuing improvement in net loss (gross write-offs net of recoveries) of $30.2m in 4Q21, down 20.3% on pcp
• 1,362 new merchants integrated across Australia and New Zealand in 4Q21 including strong growth in key verticals of health, luxury retail, home improvement, and automotive
• Based on unaudited accounts, Cash Net Profit After Tax of $68.4m, up 121.1% on pcp1

Disc: hold shares IRL

@Gummidge, I hold shares in HUM for the reasons you pointed out and HUM is good value if the pivot to BNPL goes to plan. HUM is targeting niche clients with larger transactions including Dental & Health. BNPL is a highly competitive sector and HUM comes with some significant risks and weaknesses. @Bear pointed out 10 years of poor performance by Flexigroup. ROE has shrunk from 22% in 2012 to 5% last year. 

Stengths:

• Forecast Growth 24.8% (see chart)
• PE 15.9
• PEG 0.6 (cheap)

Key Risks:

• Debt $2.21 billion
• Equity $744 million
• Debt/Equity 297% (debt is not well covered by operating cash flow)

Weaknesses:

• Future ROE = 8.9% (Low for a growth company, would  prefer 20%,  and this is also proped up by borrowed funds)

Valuation:

HUM shareholders could be well rewarded if the BNPL growth continues, if interest rates stay low and if the debt can be serviced over the next 3 years. There's a lot of 'ifs' there and valuation carries the same level of risk!

• Forecast E (2023) = $82 million*
• Outstanding shares = 394 million
• E/S 2023 = 82/394 = 20c/share
• PE 15
• Value (2023) = PE x E (2023) = 15 x 20c = $3.00

*Simply Wall Street data (consensus 3 analysts)

DIsc: Hold shares

Track Record of Management, when they were called FlexiGroup: