ZAIM Credit Systems PLC (LON:ZAIM) has received a price target upgrade to 8.61p from broker Optiva, which cited improving cashflow as well as peer comparisons for the change.
The new target, which implies a valuation of £37.6mln, compares to its previous target of 8p and reflects progress both since its IPO in both derisking and diversifying its business model, said the broker.
Cashflow is more important in this methodology, Optiva said, as having now shown proof of concept there is evidence to suggest ZAIM could achieve consistent profitability in the near term.
AIM-listed ZAIM is a microfinance lender focused on Russia that provides small short-term loans.
Microfinance is well-established and tightly regulated in Russia, adds Optiva, where one in 10 adults did not have a bank account in 2018,
Due to COVID-19 restrictions, ZAIM has recently switched its focus to online and mobile from shops and in the third quarter of 2020 50% of loans were generated in this way.
The company also became operating cashflow positive during the quarter, noted Optiva, despite significant sector uncertainty due to COVID.
Shares rose 11% to 2.9p.