- First dividend cheers investors
- Taking a cautious view of macro risk
Lendinvest (LINV) kicked off its first full year as a listed company with a quietly promising set of results that included its first dividend. The company has thrived on the back of originating specialist loans and matching lenders and professional buy-to-let investors via its proprietary platform. On its own terms, the demand from buy-to-let has shown no signs of slackening in the face of a structural shortage of property in the UK, but the company did highlight a rising macroeconomic risk that could have an impact on its loans.
The results were underpinned by this strong performance from buy-to-let, where assets under management (AUM) grew by 67 per cent to £1.5bn. The segment now makes up the bulk of the company’s total AUM when its platform business is included. LendInvest also benefited from lower funding costs under new terms from its lenders.
While the combination of rising inflation, along with interest rates, is traditionally positive for lenders as they begin to benefit from widening margins, management noted that there is now increased downside on expected credit losses. To adjust for this, it has changed its calculation of impairment to reflect a greater possibility of problems caused by a lagging economy. In Lendinvest’s own modelling, downside risk has increased to 50 per cent, up from 40 per cent on its prior weightings in 2021.
Overall, Lendinvest looks a solid proposition, the shares are now rated at a PE ratio of 14 times house broker Panmure Gordon’s EPS forecasts for 2023. That’s way above traditional lenders, but roughly in line with platform peers and wealth managers. Worth keeping on a watch list. Hold.
|ORD PRICE:||167p||MARKET VALUE:||£230mn|
|DIVIDEND YIELD:||2.6%||PE RATIO:||20|
|NET ASSET VALUE:||71p||NET DEBT:||£1.1bn|
|Year to 31 Mar||Turnover (£mn)||Pre-tax profit (£mn)||Earnings per share (p)||Dividend per share (p)|