Arrow Global (ARW), which specialises in wringing value from distressed debt portfolios purchased from mainstream lenders, revealed further robust progress at the half-year stage. Over £99m was spent in the period buying portfolios with a face value of nearly £1.1bn, while underlying cash profit rose 11 per cent year on year to £48m.
Writing back provisions by shedding non-performing loans is a useful way for banks to bolster capital, as regulators are demanding. That suggests Arrow should continue to be able to buy portfolios. Analysts at broker Numis Securities note that there are currently "a number of potentially very sizeable portfolios for sale in Arrow's core markets". It therefore expects Arrow's share of the debt purchase market to grow to 9 per cent by 2015, from just 2 per cent in 2010. The company's ability to squeeze more value from these portfolios than the vendors is also an important growth driver. Numis estimates that Arrow typically enhances the number of paying customers by 50 per cent.
Arrow isn't focused on the UK alone, though. Nearly two-thirds of the period's portfolio purchases were in Portugal, and the group has also secured a license to operate in Holland.
Numis expects EPS of 16.6p for the full year (from 14.5p in 2013), rising to 19.9p in 2015.
ARROW GLOBAL (ARW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £413m | |
| TOUCH: | 237-238p | 12-MONTH HIGH: | 278p | LOW: 207p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 67p | NET DEBT: | 213% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 48.3 | 11.2 | 5 | nil |
| 2014 | 51.6 | 13.6 | 6 | 1.7 |
| % change | +7 | +21 | +20 | - |
Ex-div: 10 Sep Payment: 9 Oct | ||||
