Our opinion on the current state of FGL

Finbond (FGL) is a micro-lending and insurance operation which operates in South Africa and America. This company wants to expand in the US to the point where 70% to 80% of its income is derived from that country within 3 to 5 years. It already has 66% of its income coming from the US and believes that the US offers significant growth opportunities. Including South Africa, Finbond has a total of 694 branches. In its results for the year to 28th February 2023 the company reported revenue up 21% and a headline loss of 15,1c compared with a loss of 17,9c in the previous period. The losses are a result of, "Firstly, the slower COVID recovery in our traditional US business, as discussed above. Secondly, a profitability lag effect created by SAIL as its book grows. Most SAIL loans are 18 to 24-month products, with interest earned over this period". In a trading statement for the six months to 31st August 2023 the compamny estimated that it would make a headline loss of between 1,4c and 3,1c compared with a loss of 8,2c in the previous period. Technically, the share was in a long-term a downward trend and has been drifting sideways since March 2022 although there is a slight uptrend now visible. A further problem is the volume traded, with only about R22 000 worth of shares changing hands each day on average. We believe that there are better options than this penny stock.