Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Debtmatters – now trading at c7x March 2007 estimates, can it really be true?

Debtmatters, one of the leading players in the IVA market came out with a positive statement today in response to the dramatic fall in its share price, which was actually triggered by announcements from some of the other big IVA players.

Debtmatters IVA and loan broking businesses are apparently both trading broadly in line with market expectations (Profit c£8.30m and EPS of 23.1p) for the full year to 31 March 2007.

It did acknowledge that the IVA sector is experiencing increased competitive pressure but that it has improved efficiencies in both securing and processing IVAs.

Having been a shareholder in Debtmatters since it originally floated I was happy to stick around when it acquired the Loanmakers business back in June 2006, thereby diversifying its offering. However, with the recent falls in its share price I have started to question the wisdom of my decision.

The shares closed today at 163p and assuming it will indeed meet market expectations for the year ending 31st March 2007 (as suggested) this would appear to suggest that the shares are now trading on c7x March 2007 estimates. Notwithstanding the bad press surrounding IVAs this sounds fairly good value to me-or am I missing something? I would also be interested to learn what percentage of 2008 financial year revenue is also already ‘in the bag’ (a good chunk I should think) and the level of marketing expenditure.

What I find particularly galling in all this is the reaction of the big banks. Having been responsible for all our indebtedness in the first place they are now getting upset when others are profiting from their earlier stupidity. If they had got it right in the firest place we wouldn't be in this mess.


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