Asset finance is a booming industry. More than £65 billion has been lent to customers in the United Kingdom for the purchase of specific items, while global expenditure exceeds £1 trillion.
Automobiles are the most popular item purchased in this manner, but the industry encompasses a vast array of products, including refrigerators, appliances, airplanes, and combine harvesters.
Banks love this type of lending since they can repossess the property. Manufacturers like asset finance because buyers can buy items they can’t afford. In addition, the market for asset-backed financing is flooded with specialized firms.
Alfa Financial Software provides all of these lenders with superior software that enables them to offer financing promptly and efficiently, from the moment a potential borrower requests money until the loan is repaid.
The London-based company is a leader in its industry, one of the few companies whose software can be used for all types of assets by all types of lenders in every region of the globe. The company is rapidly expanding, highly regarded, and managed conservatively. However, the stock has underperformed. Since going public in 2017, the stock has fallen from £3.25 to £1.59.
This loss seems unjustified. Recent results have been strong, consumers are loyal, and several large lenders are eager to access Alfa’s technology.
Last month, CEO Andrew Denton expressed optimism as first-quarter sales rose 20% to £27 million. Analysts predict that full-year revenues will increase by seven percent to more than £100 million, while profits will remain flat at £29 million due to significant investment in the business.
Alfa, unusually for a technology firm, pays dividends. The total dividends for 2022 were 9.2 pence, including 8 pence in special dividends. Denton is eager to reward shareholders whenever the group’s financial position permits. So a higher number of special dividends are possible in the upcoming year.
Before becoming CEO in 2016, Denton, a software engineer, worked in almost every area at Alfa. Under his leadership, the group has grown substantially, but there is still plenty of room for expansion. Asset finance software is a substantial industry worth £2.7 billion, and it is expected to double in size by 2030. Alfa has a market share of less than 4% despite being a market leader. But the larger it becomes, the more attention it receives.
Numerous asset finance market participants rely on obsolete, cumbersome technology that is costly to operate and difficult to upgrade.
Alfa’s software is adaptable, so it can be adapted to the changing requirements and conditions of businesses. They are also evolving.
One truck manufacturer sends mileage data directly to Alfa, allowing consumers to be billed simply for the distance driven. This owner-friendly financing will likely spread in commercial and agricultural industries.
Car manufacturers are also experimenting with technology, such as add-ons that can be charged for on an as-needed basis, such as heated seats during cold periods or extra horsepower on weekends.
Rising interest rates and corporate and consumer prices worry some investors about asset finance markets. However, the data indicate otherwise. Alfa’s clients span numerous countries and industries, so even if one sector experiences a decline, others can compensate.
Currently, the group has 32 customers and derives a third of its revenue from the United States, with an increasing percentage coming from other regions of the globe. Four significant new customers are expected to join the roster shortly, and Denton and his team are in advanced negotiations with six others.
Therefore, the company can pay generous dividends to its shareholders. And employees are loyal, which is uncommon in the fast-paced technology industry and a testament to Denton’s management.
