The leading name in aggregation and mortgage broking, Australian Finance Group is generating a new appreciation.
Shares in AFG have gone for a run recently and plenty of investors will be thinking there’s more where that came from.
A number of fundamentals may explain the AFG re-rating: lower interest rates, better business conditions and the likely wave of house price increases ahead. This combination lifts confidence and puts a rocket under credit demand.
This needs to be and will be matched with supply, which is where AFG and its industry leading broker network come in.
Then there’s manufacturing; AFG’s own brand, self-funded suite of home loan product.
AFG Home Loans stands every chance of turning into the lender’s chief growth engine followed by chief profit contributor.
While it will be a long time before AFG gives Firstmac a run for its money as the largest non-bank financial institution in Australia, this may be doable.
And anyway, the doing of it is where a lot of future AFG profits will come from.
Another theory, invited by the share price gains since April 1 is that some form of corporate activity is building in the background.
Probably not a takeover bid, but you never know.
Alternatively, some mechanism to allow the founders to sell down or out.
Between them, this group of old Perth pals speak for nearly 20 per cent of the AFG register.
Since early April AFG shares have zoomed along by 34% and the All Ordinaries only 7%.