SUNL
Sunlight Financial Holdings Inc - Ordinary Shares - Class A
Finance/Real Estate
04/26/2021
Presented
| Date | 04/19/2021 |
| Price | $10.00 |
| Market Cap | $0.43B |
| Ent Value | N/A |
| P/E Ratio | N/A |
| Book Value | $7.76 |
| Div Yield | 0% |
| Shares O/S | 43.13M |
| Ave Daily Vol | 1,113,688 |
| Short Int | N/A |
Current
| Price | $0.01 |
| Market Cap | $0.00B |
| Sunlight Financial LLC provides home improvement financing solutions to homeowners and contractors in the United States. It offers point-of-sale financing to facilitate and accelerate the purchase, sale, and installation of residential solar systems and home improvements. The company partners with solar companies and home improvement contractors to secure financing for solar systems and home improvement projects. It serves home improvement projects, including roofing, HVAC, decks/patios, energy efficiency, windows, interior remodel, home automation, and fencing contractors; and contractors of solar systems, batteries, and roofs. The company was founded in 2014 and is based in New York, New York. |
Please note, on 7/8/21 Spartan Acquisition Corp. II (SPRQ) merged with Sunlight Financial (SUNL) and assumed its company name and ricker symbol. The content of this idea will make reference to the original SPAC.
Publicly traded companies mentioned herein: BlackRock Inc (BLK), Franklin Resources Inc (BEN), Open Lending Corp (LPRO), Spartan Acquisition Corp II (SPRQ), Sunnova Energy International Inc (NOVA), SunPower Corp (SPWR),
Highlights
The presenter believes there has been a high degree of correlation in the SPAC market, which has created some interesting opportunities on the long side as quality businesses have been wrapped up in the market’s negative SPAC sentiment. With this backdrop, he is long shares of Spartan Acquisition Corp II (SPRQ), which is expected to merge with Sunlight Financial in 2H’21. Sunlight Financial provides POS technology to connect rooftop solar contractors with financial providers for loans. As an example, if a residential customer agrees to a $30,000 quote from a contractor for solar panels, the contractor can use the platform to help the customer apply for a loan on the spot. If Sunlight approves the customer, the loan will then go through one of Sunlight’s lending partners and Sunlight will earn an origination fee without exposing itself to any credit risk. If the customer is denied, the contractor will generally move on to a different originator with looser credit standards. The presenter considers this a play on a solar, ESG-friendly market that he is bullish on considering its strong growth profile (31% solar loan TAM CAGR from 2017 – 2020, 22% expected solar funded volume CAGR from 2020 – 2023) and the tailwind associated with the shift from a lease market to a loan market. Within the solar loan industry, Sunlight’s focus on high credit quality creates a competitive advantage in terms of originating new business from contractors. Based on peer analysis, he is comfortable attributing an EBITDA multiple in the high-20x range, which yields a ~$16 price target over the next year and strong upside from the current $10 share price.
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