Morses Club soars as July trade near pre-Covid levels

Shares in doorstep lender Morses Club soared on Monday as the company reported debt collection levels had almost returned to pre-coronavirus levels.

The company said July collections had hit 98% of normal levels, up from 91% at the end of June. The shares were more than 20% higher in early trade.

Cash in July improved slightly to 82.3% of the level achieved in 2019. Sales were 80.9% of the levels on the same basis.

There was also a big increase in customers using Morses online portal, with more than 110,000 customers now registered, up from around 78,000 at the end of February.

“The audit process for the company's 2020 results continues as the results will include the impact of Covid-19 on the impairment of the closing loan book as at 29 February 2020,” Morses said in a statement.

Analysts at Shore Capital said the shares were a 'hold', noting that the group has no near-term funding issues Having refinanced its debt facilities earlier in the year.

"Furthermore, it has historically had a very well capitalised balance sheet which provides a significant cushion to absorb a likely increase in IFRS 9-related impairment charges and modification losses (caused by delayed payments)."

"While Covid has caused operational disruption and additional costs, the group has managed this well in our opinion and may see operational efficiency benefits in future as it looks to restructure its property portfolio (a reduction in branch numbers would seem inevitable, in our view)."

"In addition, agent vacancy rates are said to currently be at an all time low which is also good news as agent churn can disrupt both lending and collections activities."