Elephant Loans, which joined AIM a year ago, is a growing, profitable and high margin packager of sub-prime, secured loans and mortgages acting for major lenders. The sub-prime and near-prime market encompasses those with ‘adverse’ credit records, or whose loan purpose falls outside the remit of high street players.

Marketing its wares through affinity partnerships, regionally targeted direct mail and radio, the group conducts a strict application process that weeds out a large proportion of applicants. This ‘holistic approach’ towards customer problems separates it from the herd, with applicants treated to a personal visit by an adviser before completion. ‘We go out and meet every customer that we lend to’, trumpeted Gary Miller-Cheevers, founder and chief executive.

Elephant Loans has also entered the ‘exploding’ Individual Voluntary Arrangement (IVA) market through DebtSmashers, a start-up that has ‘run out the blocks’ and boasts cross-sell opportunities from Elephant Loans, which can market its services to refused applicants.

Conservative forecasts in the market for March 2007 suggest Elephant could make pre-tax profits of £300,000 from gross income of £4.2m, ahead of £960,000 from £5.6m by 2008. Earnings of 0.1p this year, rising to 0.328p next, place the shares on a forward multiple of 28.8 dropping to a lowly 8.9.

A diluting recent share issue pulling in just shy of £1m as well as lack of liquidity could explain Elephant Loans’ less than stampeding AIM price performance to date. However, we think the group, which had a ‘total lend’ of more than £30m in 2005 now running at an annualised £60m, has elephantine speculative appeal.

Elephant Loans & Mortgages	AIM	0pm	p	p
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