Element Financial still has room to grow: CEO

Wed Jan 15, 2014 4:39pm EST
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By Cameron French

TORONTO (Reuters) - Investors looking at Element Financial (EFN.TO: Quote) and its 175-percent stock surge in just over two years could think they've missed the boat, but Chief Executive Officer Steven Hudson insists the upstart Canadian equipment financing company has plenty of upside.

Element, positioned to exploit a sector largely abandoned by big banks in the wake of the financial crisis, will seek acquisitions in the United States and Europe, could eventually issue a dividend, and plans rapid asset and receivable growth from its C$3.3 billion ($3.02 billion) at the end of 2013.

"If you look to the end of 24 months (from now), we think the company is fully built with approximated C$9 to C$11 billion of assets," Hudson told Reuters in an interview on Wednesday.

"In the vendor finance market that'll make you in the top 3 and that's where we want to play."

Shares of Element, which provides financing to companies that buy cars and truck fleets, helicopters, rail-cars and other equipment, closed at C$13.77 on Wednesday, up nearly three-fold from where they debuted on the Toronto Stock Exchange in December 2011.

Over the past two years, the company has become a darling of analysts, with eight of eight surveyed rating the stock a "buy" according to Thomson Reuters I/B/E/S.

"We believe the shares are attractively valued with potential acquisitions likely to add further valuation upside," RBC analyst Geoffrey Kwan said in a note on Monday.

SECOND ACT   Continued...