Pawnbroker Ramsdens (LON: RFX) says trading in the year to September 2022 was ahead of expectations and this has led to an upgrade to 2022-23 forecasts. Economic uncertainty and reduced competition from other short-term credit providers means there is a positive backdrop propelling growth for Ramsdens.
The pawnbroking loan book has increased from £6.1m to £8.6m, while the retail jewellery sales were 43% ahead. Higher jewellery stocks mean that net cash is expected to be £9.3m, which is lower than previously forecast. Foreign exchange volumes are four-fifths of pre-Covid levels. Gold buying did well, and the high gold price will continue to benefit this part of the business.
Liberum expects a 2021-22 pre-tax profit of £7.5m, up from £7m previously, and an improvement to £8.5m this year even though wages and energy costs are rising.
Profit contributions from each division have been upgraded, except for foreign exchange where expectations have been trimmed because of concerns about the economic uncertainty’s effect on foreign holidays. Average transaction values are higher than previously.
Ramsdens has 157 stores, but the number of openings has been lower than targeted. That shows that management will only open at the right sites and not try to meet targets for the sake of it.
The share price rose 5.1% to 207.5p, which puts the shares on just over ten times prospective 2022-23 earnings. Dividends should grow steadily. The forecast yield is 4.5%. Liberum has a target share price of 240p.