8th Apr 2022 18:16
(Alliance News) - Despite surging asset growth by LendInvest PLC, analysts still believe there is more to come from the London-based non-bank mortgage lender.
Shares in LendInvest closed 1.5% higher in London on Friday at 199.00 pence each, but has slipped 5.2% in 2022 so far.
For the year ended March 31, platform assets under management - which represents deployed capital - increased 36% to GBP2.15 billion from GBP1.57 billion, through strong demand for the company's Buy-to-Let offering.
"This marks the company's first full-year numbers since the listing in July 2021 - it supports our investment case and our 'buy' recommendation," Berenberg analyst Jonathan Richards said.
He continued: "AuM growth slightly accelerated in the second half versus the first half, and was driven by strong demand for the company's buy-to-let offering. The outlook is compelling, especially given the strong 11% year on year growth in UK property prices estimated by the Halifax house price index. Lending headroom of about GBP800 million supports the expected growth trajectory over the medium term and LendInvest expects to complete a number of transactions in 2023 that will further boost FuM."
On Thursday, mortgage lender Halifax said UK house prices surged to fresh record highs in March and have risen for the ninth month in a row.
On an annual basis, the Halifax UK house price index rose by 11% in March, slowing slightly from a revised 11.2% increase in February. The house price index increased 1.4% in March month-on-month, quickening from a 0.8% rise in February.
The average price for a home in the UK stood at a fresh record high of GBP282,753 in March, up from GBP254,640 at the same time last year.
Russell Galley, managing director at Halifax, said: "The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households' finances. Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties."
Returning to LendInvest, the firm's funds under management - which reflects committed and deployed capital - rose 18% year-on-year to GBP2.94 billion from GBP2.49 billion.
Due to the levels of FuM over Platform AuM, and in spite of an increased inflationary environment LendInvest expects pretax profit to be in line with market expectations.
Berenberg's Richards said: "Although we have not increased our estimates at this stage, we continue to believe that our forecasts are conservative over the medium term.
"Considering that LendInvest operates in a large market, we believe that the company is well suited to deliver outsized returns for investors. With that in mind, we reiterate our 'buy' recommendation for LendInvest and maintain our 275p price target."
Equity Development said its fundamental valuation remains 310p per share - which is 58% above the current share price.
Equity Development analyst Paul Bryant added: "Longer term prospects also remain strong - buoyed fundamentally by a need to dramatically ramp up housing supply to meet demand.
"While current net new housing supply in England is running at just over 200,000 per year, the UK government's 2019 election manifesto is targeting a supply of 300,000 by the mid 2020's, while other studies estimate that 340,000 new houses per year are needed for a 15 year period."
By Paul McGowan; [email protected]
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