MoneyMe Limited (ASX:MME) is a digital consumer credit business using an artificial intelligence-driven technology platform, Horizon Technology Platform, to determine eligibility and to deliver loan offerings to consumers in a rapid manner. MoneyMe has six core products including: personal loans from $2,100 to $50,000 with terms from three months to five years; a freestyle virtual Mastercard credit account which offers a revolving line of credit up to $20,000; automobile finance up to $100,000 and from 36 to 84 months; a shop now, pay later facility with credit limits up to $50,000; and List Ready and Rent Ready finance targeting the real estate sector. The company listed on the ASX in December 2019 after raising $45m at $1.25/share to give a market capitalisation at listing of $211.8m. In December 2021, the company entered into a merger implementation agreement to buy unlisted consumer lender SocietyOne in a deal which will transform MoneyMe into one of Australia’s largest non-bank personal lenders. The merger is on track for completion on March 15 after 99.9% of MoneyMe shareholders voted in favour of the acquisition. MoneyMe will pay a combination of cash ($15m) and scrip on completion of the ~$132m acquisition. The combined entity will have a loan book of $994m and MoneyMe expects to extract $17m a year in pre- tax cost synergies from FY24.
MoneyMe makes its money from interest and fees on the unsecured loans it offers to consumers. Its personal loans earn interest rates ranging from 6.25% to 21.95% depending on the risk profile of the customer and consumers pay a loan origination establishment fee of $295 to $495 and a $10 monthly fee. The freestyle credit account attracts an annual fee of $0 to $149 depending on the credit limit and charges interest of 16.99% to 25.99% according to the customer’s risk profile. The MoneyMe shop now and pay later product offers credit limits up to $50,000, an interest rate of $19.5% after the interest-free period, a $5 per month fee, and a six month to 48 month term. Autopay offers car loans up to $100,000 and from 36 to 84 months at an interest rate of 4.75% to 16.75%, a monthly $10 fee and a $350 establishment fee. ListReady and RentReady are short-term loans respectively up to $35,000 and $10,000. RentReady attracts an interest charge of 16.99%.
MoneyMe reported total revenues of $47.7m in H1 FY22, a 101% increase on that reported in H1 FY21 and a 41% increase on H2 FY21. Receivable provision ratios reduced, with the company reporting a 7.5% provision ratio for H1 FY22, versus 7.9% in both the same period a year ago and in the second half of FY21. MoneyMe reported a H1 FY22 net loss of $18.7m, compared with NPAT of $1.3m in H1 FY21. The adjusted cash net profit after tax was $10m versus $4m in H1 FY21 and $7m in H2 FY21. In H1 FY22, MoneyMe generated $441m in loan originations, compared with $114m in H1 FY21.
Australia has a robust non-banking consumer credit market with several listed players ranging from traditional consumer credit operators to fintechs such as Harmoney (ASX:HMY), Plenti (ASX:PLT) and Wisr (ASX:WZR). On a price to loan book basis, this group is trading on a median multiple of 0.49x. MoneyMe, pre-SocietyOne, is trading on a price to loan book multiple of 0.80x. However, post transaction this should fall to 0.30x, putting the company at a discount to its peers.