Resimac Group Limited

This report is an updated version of the report published on the 16 January 2023 at 3:55 PM (GMT+11)

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Resimac Group Limited (ASX: RMC) is an Australia-based company engaged in residential mortgage and asset finance lending business. The Company is focused on distributing prime and specialist products across multiple channels.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~72.78% of the total shareholding. ICM Limited and Motrose Proprietary Ltd.  are holding a maximum stake in the Company at ~62.98% and ~3.59%, respectively.

1.4 Key Metrics: The company has reported an improvement in debt-to-equity ratio from 44.17x in FY21 to 43.11x in FY22. Below is captured the trend of the total revenue and cash cycle days:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Results Highlights of FY22 (for the period ended 30 June 2022): During FY22, the normalized NPAT slightly increased to AUD 104.4mn compared to AUD 104.0mn in FY21. Further, the company received an interest during FY22 of around AUD 500.5mn compared to AUD 478.1mn in FY21.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                2.3 Loan Settlements: The home loan settlements from July to October 2022 were around AUD 1.8bn, representing 35% prime and 65% specialist. However, the company anticipates home loan origination headwinds to continue for the rest of FY23.

2.4 Dividend History: The company reported a fully franked dividend of AU 4.0 cents totaling to full year FY22 dividend of AU 8.0 cents per share, representing a growth of 25% YoY.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: P/B Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 16, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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