Is Flexigroup a Sell?

Hi Paul,

I’ve a fair amount of FXL shares with a cost price of $3.20. They’re now trading about $1.55. Should I cut my loses and sell up now?

If so, what would be some potentially better companies in which to invest the funds?

Or should I keep the funds in cash?

Appreciate your views Paul.

Kind regards,

 

A: Flexigroup’s  (FXL) business is not really the sort of financing business that I like to invest in. That said, it has a talented Managing Director (who I know personally )and the pricing is very compelling (trading on a multiple of 6.9x FY18 and 6.4 x FY19 forecast earnings).

The brokers are moderately supportive (having been burnt before). According to FN Arena, there are 2 buys and 4 neutral recommendations – with targets ranging from $1.75 to $2.15, consensus $1.91).

Given that the AGM is Monday, I guess I would wait to see what is said. The company hasn’t provided an update since its FY results in August – I am sure they will say something about how it is travelling. The risk is probably an upside bounce.

regards


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