fric
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Post by fric on Sept 7, 2017 6:39:20 GMT
So another report came out from Mogo, their business is booming, their profit after tax was ~2,1mil in just half a year. blog.mintos.com/mogo-interim-condensed-financial-information-6-month-period-ended-30-june-2017-2/What I wanted to discuss a bit and to clarify - is most of their profits going back into more of the same loans to grow the overall loan portfolio (i'm not that good at reading financial reports)? Their cash reserves seems to be small compared to their turnover (hey, I get it, you have cycle the money to earn, huge piles of cash sitting and doing nothing does not earn them anything). My long term worry is that now everything is perfect, they are profiting and all is good, but what happens if some sort of economic shocks come? If they reinvest their profits entirely into new loans of the same quality than that would mean they have exactly the same risk as lets say a year or two ago when they had much smaller profits (or even loses when they were growing). Would it be correct to say that those nice profit figures can be slightly misleading thinking that a company's profit equals to more safety? So lets say an economic shock hits Europe, since Mogo's clients are generally higher risk, lets say that they incur significant principal loss even taking into the consideration the interest payments that are still coming in. From first glance it might look that a larger company has a better chance to survive if they can keep their administrative costs down (if 60% defaults you don't have much left to work with if you have 1mil in loans, but a lot more if you 100mil loans), but since their cash reserves are low either way (just the amounts needed to keep a positive cash flow I suppose) wouldn't their buyback program end? Buyback program only works as long as they have the money to actually pay. Is there any hedging going on or limiting of the risk that can be seen in any of their financial reports?
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Post by nesako on Sept 7, 2017 7:20:50 GMT
So another report came out from Mogo, their business is booming, their profit after tax was ~2,1mil in just half a year. blog.mintos.com/mogo-interim-condensed-financial-information-6-month-period-ended-30-june-2017-2/What I wanted to discuss a bit and to clarify - is most of their profits going back into more of the same loans to grow the overall loan portfolio (i'm not that good at reading financial reports)? Their cash reserves seems to be small compared to their turnover (hey, I get it, you have cycle the money to earn, huge piles of cash sitting and doing nothing does not earn them anything). My long term worry is that now everything is perfect, they are profiting and all is good, but what happens if some sort of economic shocks come? If they reinvest their profits entirely into new loans of the same quality than that would mean they have exactly the same risk as lets say a year or two ago when they had much smaller profits (or even loses when they were growing). Would it be correct to say that those nice profit figures can be slightly misleading thinking that a company's profit equals to more safety? So lets say an economic shock hits Europe, since Mogo's clients are generally higher risk, lets say that they incur significant principal loss even taking into the consideration the interest payments that are still coming in. From first glance it might look that a larger company has a better chance to survive if they can keep their administrative costs down (if 60% defaults you don't have much left to work with if you have 1mil in loans, but a lot more if you 100mil loans), but since their cash reserves are low either way (just the amounts needed to keep a positive cash flow I suppose) wouldn't their buyback program end? Buyback program only works as long as they have the money to actually pay. Is there any hedging going on or limiting of the risk that can be seen in any of their financial reports? Any company would be hit hard in an economic burst. And most likely BuyBack would be void, but what helps is that Mogo loans have collateral, so not all money would be lost. In an even of 60% Defaults, it would be probably possible to get just under 50% of the value via auctions, so I am accounting for around 30% of investment loss if it comes to worst here.
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fric
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Post by fric on Sept 7, 2017 7:23:19 GMT
So another report came out from Mogo, their business is booming, their profit after tax was ~2,1mil in just half a year. blog.mintos.com/mogo-interim-condensed-financial-information-6-month-period-ended-30-june-2017-2/What I wanted to discuss a bit and to clarify - is most of their profits going back into more of the same loans to grow the overall loan portfolio (i'm not that good at reading financial reports)? Their cash reserves seems to be small compared to their turnover (hey, I get it, you have cycle the money to earn, huge piles of cash sitting and doing nothing does not earn them anything). My long term worry is that now everything is perfect, they are profiting and all is good, but what happens if some sort of economic shocks come? If they reinvest their profits entirely into new loans of the same quality than that would mean they have exactly the same risk as lets say a year or two ago when they had much smaller profits (or even loses when they were growing). Would it be correct to say that those nice profit figures can be slightly misleading thinking that a company's profit equals to more safety? So lets say an economic shock hits Europe, since Mogo's clients are generally higher risk, lets say that they incur significant principal loss even taking into the consideration the interest payments that are still coming in. From first glance it might look that a larger company has a better chance to survive if they can keep their administrative costs down (if 60% defaults you don't have much left to work with if you have 1mil in loans, but a lot more if you 100mil loans), but since their cash reserves are low either way (just the amounts needed to keep a positive cash flow I suppose) wouldn't their buyback program end? Buyback program only works as long as they have the money to actually pay. Is there any hedging going on or limiting of the risk that can be seen in any of their financial reports? Any company would be hit hard in an economic burst. And most likely BuyBack would be void, but what helps is that Mogo loans have collateral, so not all money would be lost. In an even of 60% Defaults, it would be probably possible to get just under 50% of the value via auctions, so I am accounting for around 30% of investment loss if it comes to worst here. The risks can vary a lot depending on the loan portfolio for the company as well as cash on hand and other assets that could be easily turned into liquid funds... Sooo if something bigger happens most of the damage will go to the investors not the company...
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Post by southseacompany on Sept 7, 2017 7:43:48 GMT
is most of their profits going back into more of the same loans to grow the overall loan portfolio (i'm not that good at reading financial reports)? No, the profits all went to the item "Loans to related parties". They didn't disclose who the related parties are. but what happens if some sort of economic shocks come? (...) Would it be correct to say that those nice profit figures can be slightly misleading thinking that a company's profit equals to more safety? Of course. The profits will dissipate quickly if there is a serious downturn. This is no different from the majority of P2P originators. Mogo pays 10% interest on its outstanding bonds and 7.5% on short term bank loans, clearly junk bond levels, so credit markets implicitly rate them as high risk. As a company Mogo is risky. At least Mogo loans have collateral. Is there any hedging going on or limiting of the risk that can be seen in any of their financial reports? Not really. Well, they paid out half a million euros as dividends to the owners. That's a way of limiting risk, on the part of the owners of course, not the company. So to be clear, the owners are slightly reducing their risk at the expense of increasing your risk, as they are perfectly entitled to do. Just be aware of it.
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fric
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Post by fric on Sept 7, 2017 8:02:04 GMT
but what happens if some sort of economic shocks come? (...) Would it be correct to say that those nice profit figures can be slightly misleading thinking that a company's profit equals to more safety? Of course. The profits will dissipate quickly if there is a serious downturn. This is no different from the majority of P2P originators. Mogo pays 10% interest on its outstanding bonds and 7.5% on short term bank loans, clearly junk bond levels, so credit markets implicitly rate them as high risk. As a company Mogo is risky. At least Mogo loans have collateral. Is there any hedging going on or limiting of the risk that can be seen in any of their financial reports? Not really. Well, they paid out half a million euros as dividends to the owners. That's a way of limiting risk, on the part of the owners of course, not the company. So to be clear, the owners are slightly reducing their risk at the expense of increasing your risk, as they are perfectly entitled to do. Just be aware of it. This was one of my dark thought in my head. The owners will start to get hefty dividends which is fine I guess, they have invested quite a bit of money as well, also there are probably people with hefty salaries at the upper management as well. So if they payout quite a bit of profits this way and a big enough financial crisis comes around, they might decide that the company is not worth injecting money to keep it running. Just go for bankruptcy and if the market in later years is still there - create a new company under different name (they already have all the know how etc.). Besides - Europe is currently in an upwards trend atm, so they probably will have a few years of nice dividends at least to cover all their investments made.
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Post by explorep2p on Sept 21, 2017 15:47:20 GMT
Hi Fric - The 2.1MM Mogo profit you are referring to was actually just for Latvia. The group profit was EUR 5.6MM for H1 17. Their profit for the year to June 2017 was EUR 8.6MM vs EUR2.6MM the year earlier.
They have grown their equity level to EUR 12MM but they are one of the more levered lenders on Mintos. However they are also one of the most profitable and are performing well. The current owners won't want to walk away from this business even during a downturn - it is probably worth well over EUR 100MM currently so that would be a painful move for them.
The amount of cash on the balance sheet isn't that important given their funding structure. It's more important to monitor their growth and their level of bad debts, and both continues to perform (surprisingly) well.
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fric
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Post by fric on Sept 22, 2017 6:00:36 GMT
Hi Fric - The 2.1MM Mogo profit you are referring to was actually just for Latvia. The group profit was EUR 5.6MM for H1 17. Their profit for the year to June 2017 was EUR 8.6MM vs EUR2.6MM the year earlier. They have grown their equity level to EUR 12MM but they are one of the more levered lenders on Mintos. However they are also one of the most profitable and are performing well. The current owners won't want to walk away from this business even during a downturn - it is probably worth well over EUR 100MM currently so that would be a painful move for them. The amount of cash on the balance sheet isn't that important given their funding structure. It's more important to monitor their growth and their level of bad debts, and both continues to perform (surprisingly) well. Why wouldn't they grow? As we can see 2017 is a year of higher GDP growth rates all across Europe, analysts say it will surely continue in 2018 and probably 2019 as well.
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Post by jackp2p on Nov 7, 2017 14:19:21 GMT
Can someone please explain to me, how it is, that - Mogo report shows Borrowings from p2p lenders 5,811,420 EUR, Mintos statistics shows Mogo in Latvia Outstanding €11,465,403 Availiable for investment, Mogo in Latvia ~ 1,000,000 EUR So, platform statistics is showing that Mogo has borrowed ~ 10 000 000 EUR, but report shows 5,811,420 EUR ? Report: blog.mintos.com/mogo-interim-condensed-financial-information-9-month-period-ended-30-september-2017/Statistis: www.mintos.com/en/statistics/
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p2pmaster
investment is life.
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Post by p2pmaster on Nov 8, 2017 8:14:27 GMT
I would assume that Outstanding is not the same as Invested, but more so that Outstanding equals listed loans on mintos.
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Post by buttchopf23 on Nov 8, 2017 8:30:08 GMT
I guess it has to do with leveragging the balance sheet
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Post by jackp2p on Nov 8, 2017 11:35:05 GMT
I would assume that Outstanding is not the same as Invested, but more so that Outstanding equals listed loans on mintos. Ofcourse Outstanding is not the same as Invested, thats why I have checked availiable investments on Mogo, Latvia, and aproximate amount was ~1,000,000 EUR So there is still a difference about 3,000,000 EUR between mintos statistics and balance sheet. That is about 50% ... does not look like a small unprecision.
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Post by jackp2p on Nov 8, 2017 11:36:46 GMT
I guess it has to do with leveragging the balance sheet Could you please explain this a litle more detailed?
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Post by extremis on Nov 8, 2017 12:34:43 GMT
Well, they have listed quite a big number of loans on Mintos platform last month. Whether this makes up for the missing 3M or not, i can't really say for sure.
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Post by jackp2p on Nov 13, 2017 12:30:22 GMT
Whether this makes up for the missing 3M or not, i can't really say for sure. And if it doesn't, what would that mean? I am not very strong in finance, but as far as I know, if someting is missing on liability side, it means that something is missing on the assests side?
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shimself
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Post by shimself on Nov 13, 2017 17:05:00 GMT
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