humm Group is a non-bank lender providing SME finance and consumer credit across Australia and New Zealand. At A$0.73 versus fair value A$0.48, the stock is overvalued by 34%. The market is pricing a 75% probability that Credit Corp's non-binding $0.77 takeover offer succeeds—we assess just 35% based on governance instability, no binding agreement, and a 249F meeting targeting three of four directors. If the bid fails, the stock faces 42% downside to standalone value of approximately 42 cents. The company earns 5.4% return on equity against a 10.9% cost of capital, destroying shareholder value with each dollar retained.

Best Fit: Event-Driven Specialists. This is a pure takeover arbitrage situation masquerading as a fundamental equity. Credit Corp's $0.77 non-binding offer expires mid-2026 with no certainty—the 249F meeting on 19 February could derail governance continuity. Investors betting on deal completion face 5% upside; those expecting withdrawal gain 42% shorting opportunity. The standalone business fails on income, value, growth, and quality metrics. Only event-driven strategies with explicit bid completion views should engage.

humm Group operates as a non-bank lender across four segments: Commercial (broker-originated SME lending, $3.4 billion assets under management), Consumer humm (buy-now-pay-later and interest-free products), New Zealand Cards (credit cards where humm holds #1 new issuance share), and Pty Plus (SME working capital). The business earns net interest income from a $5.4 billion loan book, funded through asset-backed securities, warehouse facilities, and a recently established Forward Flow arrangement. Half-year FY26 results showed net profit after tax of $13.9 million, down from $22.5 million in the prior corresponding period, driven by elevated credit losses in Commercial (net credit loss to average net receivables of 2.0%) and humm Australia's post-regulation volume collapse. The investment case hinges entirely on Credit Corp's non-binding indicative offer at $0.77 per share—without this bid, the business trades at 0.88 times net tangible assets despite generating returns of 5.4% against a cost of equity of 10.9%. Management credibility suffers from board instability (four directors, three targeted for removal) and consumer product execution failures totalling $8.5 million in impairments. At A$0.73 versus fair value A$0.48, the stock is overvalued by 34%.

What happened? First-half FY26 net profit of $13.9 million fell 38% year-on-year as credit losses peaked. Commercial net credit losses reached 1.3% of average net receivables—the cyclical high—driven by FY23 vintage loans seasoning through peak loss periods. humm Australia settlement volumes collapsed 60.6% following BNPL regulatory changes requiring credit licensing. New Zealand Cards delivered record volumes with 12.3% net interest margins, benefiting from #1 market position in new card issuance. Management impaired $8.5 million of humm Australia software and recorded $10.8 million in litigation provisions related to Forum Finance.

What's next? Earnings recovery depends on three factors. First, Commercial credit losses should moderate from the 1.3% peak as FY23 vintage loans age past maximum loss periods—management guides decline through second-half FY26. Second, humm Australia requires stabilisation at new, lower volumes following the BNPL regulatory reset; initial product launch was "disappointing" per management. Third, Cards Australia replatforming (delayed from FY26 to FY27-28) must execute without further cost overruns. The 249F meeting on 19 February 2026 creates strategic uncertainty—three of four directors face removal petitions. Credit Corp's non-binding offer provides a hard catalyst but no binding agreement exists. If the bid withdraws, the stock reprices to standalone value of 42-45 cents.

What could go wrong? The single biggest risk is Credit Corp bid withdrawal, carrying 40% probability. No binding agreement exists; the non-binding indicative offer at $0.77 depends on due diligence, board recommendation, and shareholder approval—none of which are secured. The 249F meeting on 19 February 2026 targets three of four directors for removal, creating governance paralysis that could derail the transaction. If Credit Corp withdraws, the market reprices to standalone fundamentals: a sub-cost-of-equity lender with narrowing competitive moat, trading at fair value of 42-45 cents—a 42% decline from current levels. This is pure takeover arbitrage with asymmetric payoff: 5% upside if the $0.77 bid succeeds versus 42% downside if it fails. The market currently prices 75% bid success probability; our analysis assigns 35% based on governance instability and absence of binding terms.