MoneyMe and Mighty Craft show that cash flow is king
Nick Sundich, February 1, 2023
MoneyMe (ASX:MME) and Mighty Craft (ASX:MCL) issued the two most impressive quarterlies on the ASX this week, in our view, at least judging by the share price reaction. The positive reactions were due to the companies being cash flow positive and having a solid outlook for the coming months.
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MoneyMe is focussed on personal loans
MoneyMe is a personal lender that is capitalising on the big banks withdrawing from personal loans.
Although personal loans generate lower margin than mortgages, MoneyMe hopes to capitalise due to consumer demand and its proprietary technology that enables it to achieve margins that big banks can’t because of their overheads.
MoneyMe is profitable
The company recorded a statutory NPAT of >$8m for 1HY23, up from a $19m loss in 1HY22. It also achieved record gross revenue of >$117m, up from $48m in 1HY22. Shareholders were given full year guidance of >$220m in gross revenue and a positive statutory NPAT!
At the end of 2022, MoneyMe’s share price suffered from perceptions that, as interest rates go up, people would fall into financial hardship. MoneyMe has long argued that it has higher quality customers that would be less likely to be impacted. Indeed, the average Equifax score of MoneyMe customers is 714, up from 658 just 18 months ago.
MoneyMe (ASX:MME) share price chart, log scale (Source: TradingView)
Mighty Craft is cash flow positive
Mighty Craft, one of the ASX’s handful of craft beer companies, actually released its quarterly yesterday. However, its share price has continued to rally this morning and is up over 20% this week.
The company reported $31.2m in revenue (up 91%) and positive net cash flow of $0.6m. It also reported strong sales volumes across several brands, in particular 687% sales growth from Better Beer.
Nevertheless, the company warned investors there would be several one-off and non-cash impacts on its 1HY23 results, due next month. So, unlike MoneyMe, the company may not record a positive NPAT. We’ll find out later this year.
Mighty Craft (ASX:MCL) share price chart, log scale (Source: TradingView)
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