Stocks' Details

Afterpay Touch Group Limited (ASX:APT)

Potential for Growth in US Market- Afterpay Touch Group Limited is an Australia-based technology platform company. The Company is focused on applying its technology to provide a retail payments solution that facilitates commerce between retail merchants and end customers, offering a buy now, receive now, pay later service. Recently, APT stock has also been added to the S&P/ASX200 Index, effective from June 18, 2018 as per June 2018 Quarterly Rebalance of the S&P/ASX Indices. In the meanwhile, ICM NZ Limited, UIL Limited ceased to be the substantial holder of the Group from 31 May 2018. Afterpay Touch Group Limited disclosed its business update for the three-months’ period ended 31 March 2018 wherein sales substantially grew by 400 per cent and amounted to $1.45 billion in Q3FY18 against prior corresponding period ($290 million in Q3FY17). The group has a strong balance sheet with a significant excess cash on hand and with a diversified funding source.


Company’s Receivable Funding Facility and Capacity (Source: Company Reports)

Along with this, the group has shown robust growth over the past one year and recorded a splendid growth in top line mainly due to a significant rise in the number of merchants who have recently adopted the late payment method. Its disruptive buy now, pay later service has been a winner with both consumers and retailers and has made it an attractive stock as by this consumer can spread out the cost of a purchase over several weeks interest-free. It has recently expanded in US markets and has a great chance of repeating its success in US markets. The best part is that Google Trends has shown strong search numbers for “Afterpay” in the United States which means that customers are ready to accept the product. The stock has been rising up since one year ( risen up by 87.39 per cent in last three months as on 9 July 2018) and was up by 1.5 per cent as on 10 July 2018. The Group is becoming the go-to payments platform for millennial shoppers who want to own products immediately but pay for them in instalments. We recommend to “Hold” the stock at the current market price of $10.40 and one can wait and watch its impact on US markets.
 

IPH Limited (ASX:IPH)

Increase in Debt - IPH Limited offers a range of intellectual property (IP) services and products to a client base of Fortune Global 500 companies, multinationals, public sector research organizations, small and medium-sized enterprises (SMEs) and professional services firms around the world. In the meanwhile, Commonwealth Bank of Australia ceased to be the substantial holder of the Group since 28 June 2018. The Group cancelled 621816 shares for buy-back. The Company provides a wide range of specialist services for protection, commercialisation, enforcement and management of all types of IP. Around 80 per cent of IPH’s service charges are derived from services related to patents and IPH targets slightly higher revenue growth through pricing and market share improvement.


Trend of Australian Patent Filings (Source: Company Reports)

Further, IPH group continues to hold 24 per cent market share in both Australia and Singapore and remains the patent market leader in both markets. The stock price was down by 4.74 per cent in one year (as on 9 July 2018) but climbed up by 6.1 per cent as on 10 July 2018 due to positive sentiments in the market at the back of expectations of improved patent filings in the second half while the group has a large U.S. client base. However, ROE decreased from 30.2 per cent in June 2016 to 18.6 per cent in June 2017 and there was an addition of debt in the capital structure from 0 per cent in June 2016 to 0.6 per cent in June 2017. The stock can be avoided as of now at the current price of $4.9.

 
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