Is 1pm PLC a Turnaround for This Niche Finance House?

Couple illustrating Relative Timing

Founded in Bath, UK in 1988, AIM listed 1pm Plc (OPM.L) as an alternative finance provider to the SME sector. OPM provides Lease Finance, Hire Purchase, and Business Loans to small and medium-sized enterprises (SMEs) via a network of brokers across the UK. The Company offers tailored finance packages to suit customer requirements.

Ahead of its FY results announcement scheduled for Sept 12, 2018, on June 27th, 2018 OPM published a trading update. The Company said that results will show a record year on year increase in revenue and profit, along with an increase in EPS more than 20%. FY revenues are expected to be 75% higher at £30m, while the blended cost of borrowing will be reduced to less than 4% (2017: approx 5.3%) and will reduce further as the facility with British Business Bank is utilized. CEO Ian Smith said the preliminary results “mark the successful culmination and implementation of the buy-and-build strategy pursued over the past three years, the strength of our operating model of being both a funder and a broker and our cautious approach to risk.” He added, “The Group is now better placed than ever to benefit from further organic growth and the operating synergies that flow from being a multi-product provider of finance to the resilient UK SME sector. We look forward to continuing to build value for our shareholders.”

In late July 2018, the key VectorVest RT (Relative Timing) metric (a fast, smart indicator of a stock price trend) for OPM moved sharply higher and over 1 as the stock headed toward 6-month lows at 43p. The remainder of July and August witnessed a sharp push higher for the OPM RT metric, through to today’s reading of 1.44 – excellent on a scale of 0.00 to 2.00. This move has been accompanied by corresponding share price growth, with the stock also registering a good GRT (Earnings Growth Rate) rating of 14%. Cautious investors may want to wait to see further validation of this move higher, but even so VectorVest logs a valuation of 67p per share against today’s 53p.

OPM.L VectorVest chart
Click or tap image to enlarge.

A weekly price chart of OPM.L is shown above over a period of 3 years showing the potential turnaround situation. The Earnings per Share (EPS) is shown as the blue line study on the window below the price. The latter has increased strongly over the past three years while the share price has traded in a range defined by the trendlines on the chart and in the process charted a treble bottom formation. Over the past month the share has risen on rising volume which is a positive signal. The share is on a BUY recommendation on VectorVest with a technical target close to the VectorVest valuation at 70p. Cautious investors should wait for a weekly close above the upper trendline shown on the chart.

Once again, the VectorVest stock analysis and portfolio management platform has identified a niche financial sector operator as a potential growth company. Arguably the VectorVest metrics have flagged up OPM earlier than previous sector recommendations, and therefore cautious investors may decide to look elsewhere. But it’s the early bird that catches the worm, and for adventurous investors, VectorVest believes that OPM offers an attractive investment proposition with near to midterm upside.

 

 

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