Paragon saw underlying pre-tax profit rise 14.1 per cent in the period to £43.8m as the specialist financial group continued to broaden its revenue stream away from just buy-to-let lending - leaving the shares looking too cheaply rated.
Underlying profits from its consumer finance operations actually doubled from £7.8m to £14.5m and the loan book here grew from £364m in September to £419m - mainly reflecting the purchase of a further portfolio loans, but also low redemption levels. Paragon spent £122m in the last year buying-up packages of consumer debt from banks that are keen to de-leverage their balance sheets.
On the mortgage side, buy-to-let loans to new customers grew dramatically from £29.6m a year earlier to £87.2m. That's down to strong demand for buy-to-let loans from professional landlords and Paragon's renewed ability to securitise its mortgage loans, allowing it to replenish its warehouse facility and continue lending. However, underlying profits here did slip 4 per cent to £29.3m, reflecting a £2m rise in impairment charges to £7.4m.
Peel Hunt expects to upgrade existing full-year forecasts by 2-3 per cent - it currently expects adjusted pre-tax profit of £90.2m, giving adjusted EPS of 21.9p (2011: £81.1/19.7p).
| THE PARAGON GROUP OF COMPANIES (PAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 160p | MARKET VALUE: | £ 481m | |
| TOUCH: | 159-160p | 12-MONTH HIGH: | 207p | LOW: 131p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 255p | |||
| Half-year to 31 Mar | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2011 | 39.5 | 9.70 | 1.35 |
| 2012 | 44.8 | 11.40 | 1.50 |
| % change | +13 | +18 | +11 |
Ex-div:04 Jul Payment:27 Jul | |||
