HomeChoice International plc (HiL) lifted its dividend 36% to 95 cents a share for the six months to June as its customer base grew 51% and its fintech operations delivered substantial operating leverage in a tough consumer environment.
A credible 15% revenue growth resulted in a 36% growth in operating profit at the fintech focused group. Over 89% of the group's transactions are completed through digital channels.
“We are excited by the momentum in both our businesses. With more than 2.1 million fintech customers, a compelling financial services offering, and 2 400 merchants in our digital ecosystem, Weaver Fintech is positioned for sustained high earnings growth. We will achieve this by expanding the product range and cross-selling these products. We are also pleased to see accelerated traction in the turnaround of the retail business.” executive chairman Shirley Maltz said.
The 51% growth in customers followed 39% growth in the previous financial year. HiL also increased disbursements 17% to R2.8 billion, delivered Buy Now, Pay Later (BNPL) Gross Merchant Value (GMV) of R1.5bn (up 174%) and increased its merchant points of presence to 8 700 (up 47%), wrote R85m in standalone insurance premiums (up 25%) and generated R604m in retail sales (up 2%).
CEO Sean Whibberley said in an interview the BNPL product was making it easier for consumers to buy goods in the tough financial environment, and as a result were signing up at a rate of some 100 000 per month. The next step, after some time, will be to also introduce these consumers to the group financial services and cross-sell opportunities, he said.
He said they were however taking a careful approach to growing the short-term (3-6 month) loan book in Weaver Fintech, and the growth in BNPL clients meant there was a big basket to choose from. The credit loss ratio was 19.3%, down from 19.8% last year, but was lower at between 17-18% prior to the pandemic, he said.
Cash collections increased by 32% to R5.2bn, notable growth in the constrained consumer environment.
The company’s over 2.5m customers are primarily African women. The products drive customer growth, providing convenience and a good customer experience through mainly digital channels.
The BNPL product, for instance, offers customers a 3-month, zero-interest instalment product digitally registered in minutes. Sixty-three percent of the customers are Millennials and GenZ consumers.
Weaver Fintech, which offers innovative personal lending, insurance, and value-added services through FinChoice, as well as payment solutions and merchant services through PayJustNow, generated a 31% growth in both revenue, to R1.1bn, and operating profit, to R275m.
Weaver’s customer base increased 76% to 2.1m in the six months. Loan disbursements increased 17% to R2.8bn, with 87% of the disbursement value directed to proven existing customers, a cautious approach given current economic headwinds.
The book's short-term nature and strong cash yields resulted in customer collections of R4.5bn in the six months, close to 90% of Weaver’s gross debtors’ book of R5.1bn..
Currently, 21% of customers access two or more products from the product suite, leaving scope for growth, said Wibberley.
A new retail instalment credit product, PayStretch was being piloted and would be launched in the broader market later this year. With R1.1bn in cash and undrawn funding facilities, there was ample scope to fund Weaver Fintech's continuing growth.
The BNPL product was the number one BNPL in South Africa, with 1.8m customers generating GMV of R1.5bn and fees of R73m for the six months. It has over 2 400 merchant partners, spanning 8 700 points of presence, who benefit from increased basket size, real-time shopper data and analytics, and high brand awareness through 20.2 million merchant referrals from the PJN store directory in the recent period.
FinChoice MobiMoney, the convenient and accessible three-month credit-backed wallet, grew disbursements grew by 29.4% to R1.1bn, contributing 37% to total disbursements.
The omnichannel retailer, HomeChoice’s sales steadily improved to R600m. Revenue was almost flat, and together with the rise in retail sales, a 190bps improvement in gross profit margin, and a resizing of the cost base, it enabled an operating profit of R19m.
BUSINESS REPORT