Alfa financial’s debut success
Gain to date: 1.5% Original entry point: Buy at 482.75p, 3 August 2017
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)