Buyingat discounts to NTA always seems attractive but after...

Buyingat discounts to NTA always seems attractive but after doing work on SVR, it isnot the case here and I believe there are significant risks.

1. Regulatory risk will always be very high here. They are a lender with credit card like interest rates for those who can afford it least. I’m a capitalist but this type of finance never feels good and attracts regulators.
   
2. They used to be equity funded with no debt, now they have a ~65% leverage. This means the discount to NTA is less meaningful as protection to the downside.
3. Bad debts are increasing but not significantly, so I am not yet concerned here although its hard to tell because a fast growing loan book hides bad debts and they don’t break out vintages to help you understand how things are tracking.
4. They spent $2m on legals H1 in prep costs against the ASIC case. There’s another $2m this H2 and then likely another $2m the following H1 FY25 when the case is heard. That’s $6m of legals just in defence, which makes you concerned that the possible liability should they lose be significantly higher. If the possible downside in fines was even $5m, you wouldn’t spend $6m defending yourself and would just negotiate an outcome with ASIC.

https://asic.gov.au/about-asic/news-centre/find-a-media-release/2016-releases/16-417mr-asic-action-sees-bmw-finance-pay-77-million-in-australia-s-largest-consumer-credit-remediation-program/

BMW lost against ASIC in a vehicle finance matter which originally was about 36 infringements totalling $306k. BMW lost and then the remediation program extended to 15,000 customers and cost $72m. This is what worries me.

1. They’ve now also got a NZ regulatory case. Extra $ here and extra time management are spending fighting fires.

Wouldwelcome comments here but the risks wit No.4 are too high for me and somethingI don’t understand well enough to invest here even with the discount to NTA.