The Money3 share price is on watch today after the company announced the full completion of its Automotive Financial Services acquisition.
The post Why the Money3 (ASX:MNY) share price is on watch today appeared first on The Motley Fool Australia. –
The acquisition was first announced to the market on 3 December.
The Money3 share price closed on Monday at $2.86.
Why is the Money3 share price in focus today?
It will be interesting to watch the performance of the Money3 share price today after the company advised its AFS acquisition has been completed in full. The acquisition comprises a total purchase consideration of $10.8 million, made up of a cash settlement of $3.24 million and the issue of 2.88 million ordinary shares of Money3 Corporation Limited.
The non-bank lender says the acquisition of AFS will boost Money3’s product offering in Australia, and accelerate the company’s growth into the new, used and commercial vehicle finance market.
AFS specialises in vehicle loans of up to $100,000.
Money3 has advised that AFS is a good strategic fit and aligns with its own strategy of financing a broader market. The deal will also boost the company’s product offering along the credit curve.
According to Money3, the acquisition will add $48.8 million of gross loan book as of 1 January 2021. Money3 also reported that AFS has a strong loan book quality, with less than 1% of the loan book in 30+ days arrears.
The acquisition will also be earnings accretive immediately, and is expected to improve Money3’s FY22 earnings by $2 million in net profit after tax (NPAT), with improving NPAT contribution in future years.
Money3 Managing Director and CEO Scott Baldwin said the acquisition will strengthen Money3’s addressable market, stating:
The acquisition increases the company’s market share to approximately 4% of the $6bn annual used vehicle finance market.
Money3 has experienced strong demand for vehicle finance during the first half of FY21 with record new loan originations in November 2020 and the strongest half year result the company has ever produced.
This acquisition will enable us to continue to increase our market share further in 2021.
More about Money3
Money3 is a specialist provider of consumer finance for the purchase and maintenance of vehicles in Australia and New Zealand.
According to the company, its unique approach to customer care attracts customers that are underserved by mainstream banks.
The company estimates that 1 in every 450 registered vehicles in Australia and 1 in every 700 registered vehicles in New Zealand are financed by Money3.
About the Money3 share price
The Money3 share price has returned around 20% over the past year.
In November, the company announced positive first quarter results, with statutory net profits after tax (NPAT) increasing by 33.3% against the prior period.
It also announced a new, low-cost warehouse facility of $250 million from international bank Credit Suisse Group (NYSE: CS), which would save the company more than $10 million per year in funding costs.
Based on the current Money3 share price, the company commands a market capitalisation of around $578 million.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.