MIDAS SHARE TIPS UPDATE: Tech firm Alfa Financial putting a tricky time behind it

Wheelie bins can arouse strong feelings. Ugly, unwieldy and often in the way, they have become a prevalent feature of city streets and the butt of frequent criticism. They are also expensive, especially for cash-strapped councils needing to purchase thousands at a time, along with street sweepers, dust carts and other paraphernalia. 

Many local authorities turn to asset-backed finance, borrowing money from their bank and paying the loan off in monthly instalments, to coincide with cash received from council tax and business rates. 

Asset-backed finance is a multibillion-pound industry, allowing consumers, companies and the public sector to borrow money so they can buy specific products. Lenders include banks, manufacturers and specialists, and the product range is vast – X-ray machines for NHS hospitals, trucks for haulage firms, tractors for farmers and all kinds of home appliances for individual households. 

Alfa Financial provides software that helps lenders to offer this type of finance in a way that appeals to customers and can be updated or modified whenever the need arises. 

The firm works with lenders in the UK, Continental Europe and North America and business is brisk. Chief executive Andrew Denton recently announced a 9 per cent increase in sales to £102million for 2023 and a robust pipeline of potential new customers. Profits rose 2 per cent to £29.6million, as Denton ploughed money back into the company but he also declared an 8 per cent increase in the dividend to 1.3p, alongside a chunky special dividend of 6p. 

Big asset: Alfa software is behind purchase of high-tech tractors

More payouts should be on the cards. Old-style asset finance technology can be clunky and expensive to upgrade. Alfa’s technology is easy to install and simple to modify, allowing lenders to add snazzy upgrades to their customers. Truck manufacturers can offer haulage firms the chance to calculate their carbon footprint. Agricultural giants can offer technology on tractors that pinpoints where to spray weedkiller. Carmakers can provide heated seats and steering wheels. 

Asset finance packages can include all these extras but the software has to be able to add them seamlessly. Alfa’s does just that and demand is increasing across the board. 

Denton has been through a tricky few months, however, receiving two private equity bids last year, both of which came to nothing. This was almost certainly a lucky escape but the saga took a toll on Alfa shares. Worries about missold motor finance in the UK have fuelled concern too, although Alfa’s car customers are largely in America and Germany, not here.

Midas verdict: Alfa Financial is another UK technology firm at the forefront of its field and with exciting opportunities ahead. The shares have risen 35 per cent since Midas recommended them a year ago, and investors have benefited from generous dividends too but, at £1.65, the stock deserves to go higher. An attractive prospect for new and existing shareholders. 

Traded on: Main market Ticker: ALFA Contact: alfasystems.com or 020 7588 1800 

This post first appeared on Dailymail.co.uk