DF Capital Bank – ahead of its AGM next week I return to back this finance group’s shares, now 39p, TP 49p

30.05.2025

Next Wednesday, 4th June, will see DF Capital hold its Annual General Meeting to approve the Report and Accounts for its 2024 results.

It should be a ‘plain sailing’ for the group’s Board and its Agenda Proposals on the day.

On what I can see the group’s shares are seriously undervalued – but then so many are within the finance sector.

Even so I believe that they offer a very attractive upside from the current 39p.

The Business

Distribution Finance Capital Holdings (LON:DFCH), now better known as DF Capital, is a specialist independent bank providing award-winning commercial finance solutions and savings products to consumers and small businesses.

Founded in 2016, the group, which is headquartered in Manchester with over 130 people, became a fully authorised bank in 2020 and started offering a range of consumer savings products.

DF Capital's commercial lending supports, distributors and manufacturers across sectors including Automotive, Leisure and Luxury.

The principal activity of the company is as a specialist personal savings and commercial lending bank group.

It provides niche working capital funding solutions to dealers and manufacturers across the UK.

The Bank’s inventory finance products enable manufacturers to maximise their distribution networks and allow dealers to purchase more assets, or free up working capital from cash held in stock.

It offers and serves over 12,600 active customers via its online platform and its Manchester-based customer support team, it works with approximately 90 manufacturers and almost 1,000 dealers in the leisure, commercial and powersports sectors.

Latest Results – 2nd April

The year to end December 2024 reported a 15% increase in the group’s Loan Book to £666.0m (£581.0m), while its new loans advanced to its customers rose 20% to £1,440m (£1,200m).

Its gross revenues were 27% better at £76.8m (£60.4m), with it pre-tax profits 317% up at £19.1m (£4.6m), lifting its earnings per share by 338% to 7.8p (1.8p).

CEO Carl D’Ammassa stated that:

"2024 was another year of significant progress for the Group, marking our third consecutive year of profit growth since our authorisation in 2020.

This year, we have continued to scale the bank in our core inventory finance lending space, whilst also making investments in new products and services, bringing to life our ambitions to become a multi-product lender.

I am incredibly proud of the team and the products we are bringing to life for our customers.

We have an exciting journey ahead of us."

Management Comment

In the latest Report & Accounts, Chairman Mark Stephens stated that:

“The Board believes DF Capital is an exciting growth story with a strong investment case.

It's undoubted that we have many opportunities ahead of us to further scale the bank at attractive risk adjusted returns in specialised lending niches.

The management team's focus on delivering exceptional service to our borrowers and retail depositors, through scalable and cost-efficient technology solutions sets it apart, demonstrated by the significant year-over-year growth in lending and strength of customer sentiment and the industry recognition and awards received.”

He later comments that:

“As a Board, we continue to believe the Group's share price undervalues its current and future prospects.

Whilst the global macro-economic uncertainty and some negative business sentiments in the UK remain, I'm optimistic about DF Capital's future prospects.

We are at a point of transformation for the firm as we accelerate our multi-product lending ambitions and drive further scale across the bank, unconstrained by legacy issues or remediation activities felt by others in the sector.”

The Equity

There are some 176.7m shares in issue.

The larger holders include the Wilhelmsen Family (17.54%), Janus Henderson Investors (9.93%), Liontrust Investment Partners (9.87%), River Global Investors (9.71%), UBS Asset Management (8.06%), Premier Fund Managers (7.31%), Crucible Clarity Fund (5.61%), IG Markets (5.27%) and Davidson Kempner Capital Management (4.26%).

Broker Views

The trio of analysts – James Allen, Rae Maile and Ross Luckman at Panmure Liberum, rates the group’s shares as a Buy, with a Target Price of 85p, while noting that ‘the business now has a strong foundation on which to build and to diversify into other lending products, with structured finance already growing well in the mix.’

Their estimates for the current year to end-December 2025 look for £14.5m pre-tax profits, with earnings of 5.9p per share.

For 2026, they go for £18.0m profits, and 7.6p earnings.

The 2027 trading year could see £23.6m pre-tax profits, with 10.0p per share of earnings.

My View

On the face of what I see this group’s shares have the ability to rise at least 25% in short order from 39p to 48.75p, possibly before the group announces its First Half Trading Update in early July.

Although they have not yet achieved my previous 2022 Target, I now set my new Target Price at 49p.

Growth with DF Capital

(Profile 08.04.22 @ 41p set a Target Price of 51p)

(Profile 30.05.25 @ 39p set a Target Price of 49p)