Cash Converters has demonstrated a successful strategic shift from small and vehicle loans toward lower-risk, lower-cost financial products such as Line-of-Credit (LOC) and Medium Loans. Strong operating leverage, disciplined franchise acquisitions, and an expanding luxury retail footprint continue to underpin growth.
6-Month Forecast (to June 2025):
Two scenarios were modeled:
1. **Baseline (No Rate Change)**:
- Revenue: $195M
- EBITDA: $38M
- Net Profit: $13M
- Net Loss Rate: 6.8–7.2%
- LOC Loan Book: $30M
- Commentary: Stable revenue from lending and retail, offset by flat consumer demand and unchanged funding costs.
2. **Optimistic (0.25% Rate Cut)**:
- Revenue: $198M
- EBITDA: $40M
- Net Profit: $14.5M
- Net Loss Rate: 6.5–6.8%
- LOC Loan Book: $35M
- Commentary: Improved margins from lower funding costs, better repayment behavior, and accelerated LOC uptake.
1-Year Forecast (to Dec 2025):
Assuming only a single 0.25% rate cut:
- Revenue: $405M
- EBITDA: $80M
- Net Profit: $30M
- Net Loss Rate: 6.2–6.5%
- LOC Loan Book: $55M
Commentary:
The LOC portfolio is expected to continue its expansion, likely surpassing Medium Loans by volume. Store acquisitions (up to 30 expected), a strong AI-based credit risk system, and improved consumer confidence will drive earnings growth. Net loss rates are forecast to improve marginally due to higher credit quality and operational efficiencies.
Outlook:
Cash Converters is well-positioned in a resilient segment of the economy. With undrawn credit facilities, solid cash flows, and strategic store acquisition plans in motion, the company is on a clear path to compound earnings growth—especially if monetary policy begins to loosen further in late 2025.
Dividend continuity and a stable 8%+ yield make CCV appealing for income-focused investors, with added upside potential in a lower-rate environment.
Reported Revenue (from the 1H25 report):
1H25 Revenue: $192.1 million
1H24 Revenue: $191.5 million
2H24 Revenue (implied): ~$191.1 million
So yes, Cash Converters is currently generating approximately $190–195 million per half-year, which annualizes to ~$385–390 million.
Why I Projected $405M for FY25-FY26 (1-Year Outlook):
That projection assumes:
A small boost from franchise store acquisitions (20–30 stores contributing ~1.5M–2M each in annual revenue).
Some uplift in LOC lending (which has higher average values and longer terms).
Improved retail sales performance (luxury inventory expansion and seasonal strength).
A small rate cut boosts consumer activity slightly.
So, the jump to $405M annual revenue is not a doubling but rather a modest ~4–5% uplift from the trailing $387M — realistic under an improving environment with growth investments.
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