Morgans sees 2x upside in ASX finance stock after hitting key milestone

ASX finance stock Moneyme Ltd (ASX: MME) jumped earlier this week after the ASX finance company said it had hit profitability during the quarter on growth in its loan book.

Strong growth figures

The company said in a statement to the ASX that it had generated new loan originations of $325 million in the third quarter of the financial year, which was up 43% on the previous corresponding period and up 18% on the second quarter of FY26.

The company’s loan book grew by $150 million to $1.9 billion, up 29% on the previous corresponding period, “reaching the scale required to achieve normalised net profit after tax profitability”, the company said.

Revenue for the quarter came in at $62 million, up 17% on the previous corresponding period, with net credit losses reducing to 2.6%.

Moneyme Managing Director Clayton Howes said it was a key milestone for the company, and added:

The third quarter marked a step-change in performance, with originations increasing by $50m quarter-on quarter and the loan book reaching $1.90bn. This represents an inflection point, delivering a positive Normalised NPAT in the quarter, with revenue growth outpacing costs and driving operating leverage. Despite interest rate and inflation pressures, our credit performance remains strong with loss rates declining as we continue to focus on secured vehicle finance and high credit quality segments. This, alongside a predominantly variable interest rate loan book enables us to absorb these market pressures, maintain risk adjusted NIM, and price effectively for capital preservationWe continue to capture market share in under-served segments through fast, innovative and well-priced products and outstanding customer service. At the same time, our multi-product strategy is gaining traction, with momentum building in credit cards. The launch of our Cashback Rewards Credit Card and upcoming white-label partnership with Luxury Escapes will expand access to millions of potential customers. While credit card growth may have a near-term impact on profitability, it is expected to deliver meaningful margin expansion as the portfolio scales.

Mr Howes said the company’s funding structure was a key strength, “with a robust corporate facility and strategic partnership with iPartners delivering favourable terms, including a 75-basis point reduction in funding costs that further supports growth and margin outcomes”.

Moneyme also during the quarter launched its own new credit card and entered into a white label credit card partnership with Luxury Escapes.

Shares looking cheap

Moneyme shares traded as high as 9.9 cents higher on Wednesday (up more than 16%) when its quarterly results were announced, before settling back over the week to be changing hands for 8.8 cents apiece on Friday.

Morgans has a price target of 21 cents on Moneyme shares.

The company is valued at $71.5 million.

The post Morgans sees 2x upside in ASX finance stock after hitting key milestone appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.