I mentioned yesterday that I hold PPM along with Solvar as dividend plays in the financial sector. I think PPM is a compelling dividend stock for those to consider. Currently trading at $1.46 which is unbelievably only 8c higher than their book value!!!

At a present PE of 4.5 one can argue it could be a compelling buy even for those in search of CG if they can continue to grow.

Personally, I think it has been well oversold. With recent earnings of 33c and dividends of 14.4c the margin of safety with respect to dividend payment maintenance is present (something I like to look at when buying a dividend stock).

Although, it had some NIM compression in recent times I think the opportunity for growth in this area now that the banks have left provides opportunity for continued growth.

For those dividend investors, at $1.46 and a 0.144c you are looking at a fully franked 9.7% return + franking credits.

So if the market is wrong in its valuation of PPM and they continue to grow or even maintain their dividend in this present environment I think you can do much worse than a 9.7% annual return.

I should note entering 2023 there will possibly (most likely) be an increase in bad debts especially with respect to unsecured loans. However, if you are willing to ride out the next 12-18m then PPM could be an alternative to a high interest saving account for those with a stronger risk appetite.

Half yearly results up 29% from 56m to 72m (suggesting a PE ~10). With both loan originations and AUM both up. A good result considering NIM was reduced to 2.29 from 2.59 and they announced a $2.1m right off in their investment in Volt Bank. (Note I hold iRL). As I mentioned in my MAF straw both provide exposure to financial industry allowing for exposure to growth and dividend returns.

ASX announcement below.

https://newswire.iguana2.com/af5f4d73c1a54a33/announcements/ppm.asx/2A1392806/PPM_Announcement_2A1392806.pdf?download=1

Leading non-bank lender Pepper Money to acquire 65% of Stratton Finance - one of Australia's largest online asset finance brokers. Refer to ASX for in-depth info.

“Hidden” at the the announcement above was an update on the first quarter.

Mortgage Originations up 54% on the PCP. Closing AUM at 13B up 20% on PCP. Asset Finance Originations up 78% on the PCP. Closing AUM at 3.9B up 39% on PCP. Refer to ASX for additional info.

With the top 20 holding 96% I can see significant movements in this with further positive news at the HY results as the remaining 4% float representing only 11m shares.

I took a starter position in my personal portfolio and have sold off my AHI holding to start a position in my strawman account. As previously mentioned I am continue to review but, I am attracted to what looks like a significant growth profile, profit growth and dividend paying potential. The purchase of Stratton Finance adds to what looks like a possible significantly undervalued jewel.

What am I missing? I would be interested in hearing from the holders (2 on Strawman) on whats holding back the valuation? IPO price of 2.89 and today priced at 1.73 with 130m in NPAT (~29c/share) paying out a 9c dividend. At a PE ratio of ~5 I wonder if there are historical issues (I need to do more research) which have investors standing off!