Date of Data Capture: 15/7/2016
Name: MONEY3 CORPORATION LTD (MNY)
Classification: Consumer Lending
Current Price: $1.19
Market Capitalisation: $176M
Forecast EPS Growth: 19%
Gross Yield: 5.0%
Consensus Price Target: $1.50
# Covering Analysts: 1* (*thin coverage)
Discount at Current Price: 26%
Price Target Trend: Flat
Signal Time Frame: Monthly/Daily
Trend Bias: Up/Flat Medium/Short-term
Set up Notes:
• After consolidating for over 15 months MNY is working its way back up against resistance at $1.20 after proving the great strength of support down at 90c.
• There could well be some volatility on breaking $1.20 but we have good support layered down at $1.10 and $1.00 with a wall at 90c.
• Good momentum across most major timeframes and after $1.20 we start looking at old targets like $1.30, $1.50 and $1.80.
Growth Focus: MONEY3 CORPORATION LTD (MNY)
Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.
Micro-financing lender Money3 (MNY) has over the last few years been a story of give and take. After completing a beautiful multi-year and multi-bagging uptrend MNY fell victim to its own success, lofty values and inevitable fast-growing pains as they expanded both organically and through acquisition and also as they adjusted their business practices along the way. Just like growing pains, cycles of price growth also come in stages – and right now we believe a new uptrend is forming, making us very willing to pay high levels of interest.
Formed in 2005 and based in Melbourne, Money3 operates through its provision of niche loan financing. With the move away from payday loans they have a renewed focus on secured lending for short-term loans, car and equipment loans as well as some more bespoke second-tier servicing. Having bolstered their debt funding capacity and distribution we see further strong growth coming from this idiosyncratic market, and that could be very significant with Money3 showing a 114% growth in profits from their last half-year reports. This trend is seen to be continuing with excellent growth forecast through to 2018.
It’s always nice to get a dividend from a growth stock, especially one coming in at a respectable 5% yield, but even without that MNY has good fundamental prospects. They are predicted to maintain strong growth in earnings, sales and profits, whilst retaining steady margins. While having very thin analyst coverage weakens the impact of that positive valuation (and reduces their potential investor audience size) their current value as compared to projected value represents a discount of around 26% - leaving a decent margin for error and is a view that credits some attractive approval from their backers.
Beginning in mid-2012, Money3 ran up gains of 450% by February 2015, reaching a peak of $1.80 before falling into a major consolidation and reaching lows of 80c only ten months later. Meanwhile, MNY seems to have formed a base around 90c, bouncing off support established throughout 2013 to work its way off the bottom. With recent signs of strength pointing to a probable break of this downtrend we think the correction may be running on borrowed time, if not already in arrears. With recent advances they seem to be taking on a new lease on life and look ready to begin charging ahead once more.
Price analysis of Money3 shows excellent correlation with our main signal timeframes and especially so within the longer cycles. Importantly these have turned positive for the first time in over a year, combining fortuitously with a clean break of structural resistance at $1.00 and dynamic resistance clustered up to $1.07. Enticingly in the last 2 weeks we have seen the price ceiling break with a sharp burst to the upside (past $1.10 and as high as $1.23) before swooping back down for a successful retest of that same zone, proving good dynamic support around $1.08.This burgeoning uptrend will attract many eyes if it finds its feet here - and it is easy to see the aggressive moves since that break as a sign that we may not be the only ‘loan-wolf’ to pounce on MNY should they start running again.