Alfa fi­nan­cial’s de­but suc­cess

Gain to date: 1.5% Orig­i­nal en­try point: Buy at 482.75p, 3 Au­gust 2017

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DE­BUT HALF YEAR re­sults (31 Aug) from the en­ter­prise soft­ware sup­plier to the as­set and con­sumer fi­nance in­dus­try were im­pres­sive. Rev­enue and ad­justed earn­ings be­fore in­ter­est and tax in­creased 29% and 20% re­spec­tively, and that’s af­ter strip­ping out cur­rency ben­e­fits.

The scale of the op­por­tu­nity is clear with so many legacy IT sys­tems that are strug­gling to match digital trans­for­ma­tion de­mands, not to men­tion nav­i­gate in­creas­ingly stiff reg­u­la­tory chal­lenges.

Alfa Fi­nan­cial’s (ALFA) sin­gle plat­form cloud-based ap­proach makes tran­si­tion rel­a­tively easy for clients. Alfa’s abil­ity to roll new de­vel­op­ment across its en­tire plat­form makes its sys­tem a com­pelling out­sourced IT propo­si­tion.

We said in­vestors would con­tinue to pay a pre­mium for this op­por­tu­nity and this was demon­strated post re­sults. The stock ral­lied 13% in the wake of the fig­ures, un­wind­ing a short weak spell as, pre­sum­ably, in­vestors banked short-term prof­its. Alfa has also now of­fi­cially joined the FTSE 250.

There are no firm plans for a div­i­dend yet, but we ex­pect that to change sooner rather than later given Alfa’s strong cash gen­er­a­tion.


We re­main com­mit­ted to this high-qual­ity tech­nol­ogy growth op­por­tu­nity. Still a buy. (SF)

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