Orchard Funding posted strong H1 FY25 results (HY ended 31 January 2025), with growth in lending volumes and revenue resulting in a near doubling of EPS, translating to a record NAV of 95.8p; 3.4x above current share price. The strong H1 showing led to a reinstatement of interim dividend (1p per share), with an additional special dividend (1p) declared. Geopolitical and macro-economic risks notwithstanding, the Company is optimistic that the H1 growth trajectory will continue into H2 FY25. On the back of a strong interim performance, forecasts have been upgraded. Key changes include lending volumes and revenue increase (FY25) and higher gross margins (FY25 and FY26). FY25 net profit and EPS increases 32% and in FY26E net profit and EPS are 26% higher versus prior forecast. NAV is 0.5% higher at 96.9p in FY25E and by 3% in FY26E to 107.6p. Orchard Funding’s shares trade at a mere 2.2x PER and a 71% discount to FY25E NAV, unjustified in our view, given the Company’s growth track record.
