Silver Chef feels heat as shares plunge
The company, which specialises in leasing kitchen equipment to restaurants and cafes, has long been a favourite among investors due to its high growth rate.
On Thursday its shares plummeted 28 per cent after it warned its profit would be 10 per cent to 15 per cent lower than expected.
The downgrade follows a string of other share price falls by small-listed, non-bank lenders, including Cash Converters and Radio Rentals owner Thorn Group.
The company said in a statement that the lower guidance was due to slower asset acquisition within its GoGetta business, which leases commercial equipment such as trucks and machinery to small businesses.
"The company has implemented a number of initiatives to stimulate growth and has observed a recovery over recent weeks," it said.
Both Silver Chef and Cash Converters have been the beneficiaries of non-bank credit themselves through corporate bonds held with fund manager FIIG.
Silver Chef raised $30 million last year through the six-year bonds at 8.5 per cent.
The company is expanding its brand into Canada and is in the process of acquiring a new processing centre in Melbourne. It said its hospitality business continued to perform in line with expectations.
Cash Converters shares fell in October after the company was hit with a $40 million class action alleging thousands of its customers had been caught by exorbitant interest rates.
The corporate regulator has also moved to crack down on pay day lending. Silver Chef shares closed at $5.30.
Frequently Asked Questions about this Article…
Silver Chef's shares plummeted by 28% after the company announced a profit downgrade, expecting profits to be 10% to 15% lower than initially anticipated. This was primarily due to slower asset acquisition in its GoGetta business.
Silver Chef's GoGetta business focuses on leasing commercial equipment, such as trucks and machinery, to small businesses. The recent slowdown in asset acquisition within this segment contributed to the company's profit downgrade.
Silver Chef has implemented several initiatives to stimulate growth and has observed a recovery in recent weeks. The company is also expanding its brand into Canada and acquiring a new processing center in Melbourne.
Silver Chef has benefited from non-bank credit through corporate bonds. Last year, the company raised $30 million through six-year bonds with an 8.5% interest rate, which has helped support its financial activities.
Despite the challenges faced by the company, Silver Chef's hospitality business continues to perform in line with expectations, maintaining its stability amidst the broader financial issues.
Other non-bank lenders like Cash Converters and Thorn Group, owner of Radio Rentals, have also faced share price declines. Cash Converters, in particular, has been affected by a $40 million class action related to high interest rates.
The corporate regulator has been cracking down on payday lending practices, which has affected companies like Cash Converters. This regulatory pressure, combined with legal challenges, has contributed to their financial difficulties.
Silver Chef is actively expanding its operations into Canada and is in the process of acquiring a new processing center in Melbourne. These strategic moves are part of the company's efforts to recover and grow after the recent profit downgrade.
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