COG Financial Services (COG) – Share price better reflecting growth options

COG Financial Services provides equipment financing and broking, aggregation, insurance broking, and novated leasing activities for small to medium-sized enterprises in Australia. COG Financial Services was incorporated in 2002 and is based in Chatswood in Sydney.

We have upgraded our COG Financial Services valuation to reflect the sale of non-core holdings in Earlypay and Centrepoint Alliance. The $26 million in net proceeds further strengthens the company’s capacity to invest in the growth engines of novated leasing, asset finance brokerage and insurance broking. The increased earnings contribution from novated leasing has created a more balanced earnings mix and supports group return on equity (ROE). Forecast FY25 net profit is likely to be broadly flat on an underlying basis, excluding the EPY/CAF profit contributions. Asset finance industry conditions are generally supported by a lower base interest rate environment and COG Financial Services is well-placed for when the cycle turns. Our target price is now $1.92 and we have an Accumulate recommendation.

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