Business Overview
International Personal Finance Plc provides unsecured consumer credit to customers across eleven markets. The company offers consumer finance products, channels and brands through home credit and digital. The company operates in 5 home credit markets and 8 IPF digital markets with its 21,000 agents.

Recent News
On 8^th November 2019, the company announced Richard Moat, a non-executive director and Senior Independent Director of the Company, has been appointed as Chief Executive Officer of Technicolor Plc with effect from 5 November 2019.

Trading Update for Q3 FY2019 (30^th September 2019)
The company expected full-year 2019 profit before tax in line with consensus expectations. It has delivered a 1 per cent increase in credit issued with a continued strong operational performance. The company’s impairment as a percentage of revenue was 27.8 per cent, reflecting a combination of very strong credit quality in European home credit and more challenging performances in Mexico home credit and IPF Digital's new markets. In IPF Digital, the company expected to deliver a maiden profit in 2019.

Financial Highlights – H1 Financial year 2019 (30th June 2019, GBP, million)
In the first half of the financial year 2019, the company’s revenue increased by 7 per cent to GBP 446.9 million as compared to GBP 418.9 million in the H1 FY2018 due to growth in issued credit in IPF digital business. The company’s revenue less impairment increased to GBP 323.10 million as against GBP 316.40 million in the H1 FY2018. The reported total costs increased to GBP 267 million in H1 FY2019 from GBP 259.9 million in the H1 FY2018. The reported profit before tax declined to GBP 56.1 million in H1 FY2019 from GBP 56.5 million in the H1 FY2018. The company’s basic earnings per share were 14.80 pence in H1 FY2019 as compared to basic earnings per share of 16.70 pence in H1 FY2018. The company’s diluted earnings per share was 14 pence in H1 FY2019 as compared to diluted earnings per share of 15.90 pence in H1 FY2018. The company’s interim dividend stood at 4.6 pence for the period.

Share Price Performance

Daily Chart as on 13^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 13^th, 2020, International Personal Finance Plc shares were trading at GBX 177.60 at the time of writing before the market close (at 10:22 AM GMT), down by 1.22 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 210/GBX 86.80. The stock price has givennegative 12.42 per cent returns during the previous year. In the last three months, the stock price has given 25.95 per cent returns and now some profit booking is expected in the stock.

Valuation Methodology


*Peers: Amigo Holdings Plc, DDM Holdings AG, B2holding ASA, Non-Standard Finance Plc, OneSavings Bank Plc and Hoist Finance AB

Conclusion
The company has delivered a decent financial performance in the first half of the fiscal year 2019 and recent trading updates are also strong. However, there are certain risks and uncertainties associated with the business of the Group. The company could suffer losses or fail to optimise profitable growth due to a failure to operate in compliance with regulatory norms. Excessive competition in the industry could impact the revenue and profitability of the Group. Unable to provide product proposition according to customer needs could hamper the business of the company. Failure in adopting new technologies could affect the overall business of International Personal Finance.

Based on the headwinds and the valuation methodology as done above, we have given a “Sell” recommendation at the current price of GBX 179.20 (as on 13th February 2020 before the market close at 11:40 AM GMT), based on 5.19x NTM Price/Earnings multiple (approx.) on FY20E earnings per share (approx.).

*All forecasted figures and information have been taken from Thomson Reuters.

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