Cash Converters' Three-In-One Model Starts Paying Off

Fund managers track a strategic reset away from payday lending alongside a steady buyback of franchised stores

31 Mar 2026 · 4 min read

Perennial Partners and Balmoral Investors both pointed to the same first-half FY26 result in March 2026 as evidence Cash Converters' strategic reset is paying off. The managers described the company's three-in-one model, combining the buying and selling of second-hand goods, secured pawnbroking, and regulated unsecured personal finance, as generating multiple revenue streams from a shared customer base that improves store economics and resilience through economic cycles. Revenue rose 7.6 per cent for the half with operating EBITDA growth of 17.9 per cent, while the company remained fully funded with a $43.5 million cash balance and $74.3 million of debt capacity.

This transition has materially improved credit quality and reduced bad debt outcomes, while enhancing the predictability of earnings. The 1H26 result was a clear illustration of the increasing earnings diversity in the business and emerging momentum.

— Balmoral Investors, Monthly Report, March 2026

Exiting payday lending for a steadier credit book

That earnings quality improvement stems from a deliberate shift away from higher-risk lending. Both managers noted the current management team completed a strategic reset by exiting so-called pay-day lending products in favour of longer-duration, lower-cost credit offerings, a transition that has reduced bad debt outcomes even as it takes time to fully show up in reported earnings. Salter Brothers, describing the same broader strategy in October 2025, added that further margin expansion is expected as Cash Converters discontinues its Small Amount Credit Contract loan book entirely.

Buying back the franchise network

Alongside the credit book overhaul, Cash Converters has been steadily converting franchised stores into company-owned outlets. Salter Brothers reported the company completed a capital raise in October 2025 to fund ongoing acquisitions and corporatisation of its franchise network, acquiring 29 Australian franchises for 4.5 times FY25 actual EBITDA, expanding its Australian corporate footprint to 121 stores. The manager said it saw valuation upside as the corporate-owned store base grows, unlocking cross-selling opportunities and margin expansion through increased scale. Perennial Partners and Balmoral Investors noted the company had already acquired 41 stores in FY26 for around $50 million, though their own forecasts assume this pace reverts to a more normalised level of around $20 million in FY27, leaving potential upside if management takes a more aggressive approach to the rollout.

Profit-taking through the rally

Not every holder has been adding through this period. NGE Capital trimmed its position in August 2025 on the back of strong share price performance following solid FY25 results, locking in further profits to reduce its holding from around 11.0 million shares to 8.9 million, and trimmed again in December 2025 down to 5.84 million shares, a pattern of steady profit-taking even as the underlying acquisition and credit-quality story continued to develop.

What managers are watching next

With the SACC loan book wind-down still progressing and the pace of franchise acquisitions expected to normalise from $50 million in FY26 to around $20 million in FY27, the key questions for managers are whether Cash Converters continues acquiring stores at a more aggressive clip than currently forecast, and whether the improved credit quality from exiting payday lending continues translating into the kind of operating EBITDA growth seen in the first half.