Afterpay Touch Group Ltd

Robust Performance in the fourth Quarter 2018 and FY18: Afterpay Touch Group Ltd.’s (ASX: APT) stock has risen 105.3% in three months as on August 13, 2018. The company has recently released the strong business update for the June 2018 (Q4 FY18) quarter and the FY18. In the fourth quarter of FY 18, APT’s underlying sales grew 171% to approximately $736m over Q4 FY17 and this represents a 39% increase over Q3 FY18. In FY 18, the total underlying sales processed through the Afterpay platform grew 289% to over $2.18bn. Meanwhile, APT launched U.S. business in mid-May 2018 and delivered over $11m of underlying sales in the first full month, as at June 2018. The company has signed over 400 retailer contracts and over 200 retailers are currently transacting on the platform, including major millennial focused brands, URBAN OUTFITTERS (live since 16 May 2018) and REVOLVE (live since 9 July 2018). Further, there are significant number of new enterprise retailers and service providers that have continued to sign-up to APT in Australia, that includes BOOHOO, BING LEE, MITRE 10 and DIESEL, in both traditional retail categories and new vertical expansion categories such as health, beauty and entertainment having a strong future pipeline. APT’s in-store is also building momentum with approximately 10,000 individual shopfronts now live with APT in-store. Moreover, APT witnessed several senior, globally experienced team members joining the company’s business in FY18 for the business expansion and core product and system development, particularly in the areas of risk, data and technology development. Additionally, in the Q4 FY18, the gross Losses and Net Transaction Losses trended down and improved over the second half of FY18, despite the rise in underlying sales performance and merchant diversification in the same period. Therefore, the company expects a stronger Net Transaction Margin in the second half of FY18 compared to H1 FY18. In addition, APT expects FY18 Group Revenue and Other Income to be of $142m, FY18 Group EBITDA to be in the range of $33m to $34m and FY18 Group EBTDA is expected to be in the range of $27m to $28m. On the other hand, APT stock was added to S&P/ASX 200 Index, effective from June 18, 2018. Therefore, based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 15.100 (up 5.8% on August 14, 2018).
 

EML Payments Ltd

Five Year Agreement with leading German malls operator ECE:EML Payments Ltd (ASX: EML) through its wholly owned subsidiary, EML Payments Europe Limited has signed a five year agreement with German shopping mall operator ECE Projektmanagement G.m.b.H & Co. KG (‘ECE’) for the management of the new consumer gift card program for 87 of their shopping malls in Germany. Perfectcard DAC, which is now a subsidiary of EML Payments after the recent acquisition announced on 5 July 2018, will issue the program expected to launch in its entirety in October 2018. Additionally, Perfectcard is expected to generate EBTDA of A$400k – A$600k in FY19 after first year integration costs. Meanwhile, EML stock has risen 36.36% in three months as on August 13, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 1.660.

 
 
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