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Wheelie bins can arouse strong emotions. Ugly, bulky and often embarrassing, they have become a common fixture on city streets and the target of frequent criticism. They are also expensive, especially for cash-strapped municipalities that must buy thousands of them at a time, along with sweepers, dust carts and other accessories.
Many local authorities are turning to asset-backed finance, borrowing money from their bank and repaying the loan in monthly instalments, to coincide with cash flow from council tax and business rates.
Asset-backed finance is a multi-billion dollar industry, allowing consumers, businesses and the public sector to borrow money in order to purchase specific products. Lenders include banks, manufacturers and specialists, and the range of products is vast: x-ray machines for NHS hospitals, trucks for transport companies, tractors for farmers and all manner of household appliances for individual households.
Alfa Financial provides software that helps lenders offer this type of financing in a way that is attractive to customers and can be updated or changed whenever the need arises.
The company works with lenders in the UK, continental Europe and North America and business is brisk. Managing director Andrew Denton recently announced a 9% increase in sales to £102m for 2023 and a strong pipeline of potential new customers. Profits rose 2 percent to £29.6 million, as Denton reinvested money into the business, but it also declared an 8 percent increase in the dividend to 1.3 pence, as well as a big special dividend of 6p.
Big advantage: Alfa software is behind the purchase of high-tech tractors
More payments should be planned. Old-school asset finance technology can be cumbersome and expensive to upgrade. Alfa’s technology is easy to install and simple to modify, allowing lenders to add elegant upgrades for their customers. Truck manufacturers can offer transportation companies the ability to calculate their carbon footprint. Agricultural giants can offer technology on tractors that indicates where to spray weedkiller. Car manufacturers can provide heated seats and steering wheels.
Asset finance packages can include all of these extras, but the software must be able to add them seamlessly. Alfa is doing just that and demand is growing across the board.
Denton has endured a rough few months, however, receiving two private equity offers last year, both of which went nowhere. It was certainly a fortunate escape, but the saga took a toll on Alfa shares. Concerns about poorly sold car finance in the UK have also fueled concerns, although Alfa’s car customers are mainly in America and Germany, not here.
Midas Verdict: Alfa Financial is another UK technology company at the forefront of its field and with exciting opportunities ahead. The shares are up 35 per cent since Midas recommended them a year ago, and investors have also benefited from generous dividends, but, at £1.65, the stock deserves to go higher. An attractive prospect for new and existing shareholders.
Exchanged on: Main market Teleprinter: ALFA Contact: alfasystems.com or 020 7588 1800