Ann: HMY delivers FY22 Cash NPAT Profitability, page-4

So spent the night learning the business model.

Looks like they can leverage at around 10x so roughly $800m debt funding capacity to $80m net assets + convertible notes.

Meaning it all comes down to what margin they can earn on loan book, for example:

Currently valuation requires:
1% margin on $800m = $8m NPAT = 10 PE = 10% ROE = 10% EPS growth P.A = 75c SP

Upside valuation requires:
2% margin on $800m = $16 NPAT = 15 PE = 20% ROE = 20% EPS growth P.A = $2.40 SP

So a NPAT margin blueprint may look something like:
16% - Lending Rate
Minus
3% - Borrowing Rate
3% - Bad Debts
3% - Marketing
3.5% - Administration
Equals
3.5% - EBITDA
3% - EBIT
2% - NPAT Margin

At the moment they are achieving their Lending, Borrowing, Bad Debt targets but are significantly over on Marketing and Administration so will need to scale by growing loan book signficantly while maintaining minimal increases in that OPEX base.