Spotted this online article in The Australian today. A few...

Spotted this online article in The Australian today. A few payday lenders in Australia are in trouble with the regulator including Cashies biggest competitor, the Cash Store. Cashies management have been flagging that the new regulations will bring opportunity.


... THE two locally listed pay-day lenders are watching the Canadian-listed Cash Store with more than passing interest after the parent company reported it had been unable to raise capital partly because of unfavourable regulatory changes in Australia.

Cash Store is Australia's second-biggest pay-day lender behind Cash Converters. A new federal law requires pay-day lenders to scrutinise customers' bank accounts for the previous 90 days to determine ability to repay.

"Changes in the Australian regulatory environment over the past number of months and the company's continuing losses have materially impacted its ability to source the capital," Cash Store says. "The inability to raise capital will materially impact the continuing operations of the company and will affect its ability to meet its obligations in the future."

By order of the Alberta Securities Commission, Cash Store has been in a trading halt since August last year as it tries to get its accounts in order. Cash Store is also being probed by the Australian Securities & Investments Commission, but it's not the only payday lender to be on the nose with consumer advocates.

If Cash Store falters here, there's a chance for Money3 and Cash Converters to pick up sites. Money3 today will announce a raising of up to $10.2m at 85c apiece, a 1c premium on Friday's closing price. Money3 raised $15.9m in 2012-13 and on its recent performance (a 44 per cent full-year profit surge to $3.64m) there should be no shortage of takers.

The banks are also more than happy to advance wholesale funds to pay-day lenders and Money3 is negotiating a deal with Westpac.

We'll treat Money3 as a long-term buy and Cash Converters as a hold.