Afterpay Touch Group Limited

Organisational and Governance Change: Afterpay Touch Group Limited (ASX: APT) is a mid-cap information technology company with the market capitalization of ~A$6.16 Bn as of 2^nd July 2019. Recently, the company, via a release, updated the market players about organisational and governance changes in order to support the pursuit of its mid-term strategy and continue to deliver value to its shareholders. Mr. Anthony Eisen will now be CEO & Managing Director of the Company. He would be overseeing the management of the Company’s operations and will focus on managing the global business.

Adding to that, Frerk-Malte (Malte) Feller has been appointed as Global Chief Operating Officer from 1^st July 2019. The company has successfully raised funding amounting to $317.2Mn via fully underwritten institutional placement at the price of $23.00 per share. It will utilize the fund in order to support its mid-term plan.

The company has maintained Net Transaction Margin, Gross Loss and Net Transaction Loss on May FY to date basis, which is broadly in accordance with the performance achieved in the 6 months period to 31 December 2018. The following picture gives the ides of underlying sales/GMV:


Underlying Sales (Source: Company Reports)

In another update, the company mentioned that Mr. Nicholas Molnar has changed his substantial holding with voting power to 8.09% from the previous voting power of 10.33% on 14th June 2019. Mr. Anthony Eisen has also made a change of interest in substantial holding with voting power to 8.09% from 10.33%.

What to Expect: The company is focused on international expansion for FY20. Additionally, the company is targeting $20 billion ++ in underlying sales (GMV) per annum by FY 2022.

Stock Recommendation: The company’s execution path and expansion plan are based on increasing long term shareholder value. The current ratio of the APT stood at 7.80x in 1H FY19 against the industry median of 2.81x, which indicates that Afterpay Touch Group Limited is in a better position to meet its short-term obligations. On the other hand, the net margin stood at -19.8% in comparison to the industry median of 23.2%. On the stock’s performance front, it witnessed a rise of 5.26% and 8.98% in the time span of one month and three months, respectively. As per ASX, the stock is trading closer towards 52-weeks higher levels of $28.760. Hence, considering the above-stated facts and current trading levels, we advise the investor to watch the stock at the current market price of A$26.090 per share (up 6.926% on 2^nd July 2019) and wait for better entry levels.
 

Praemium Limited

Non-custodial admin FUA reaches $6 billion: Praemium Limited (ASX: PPS) is involved in the portfolio administration services. The market capitalisation of the company stood at ~$158.06Mn as on 2^nd July 2019. The company recently announced that BlackRock Inc. and subsidiaries have become an initial substantial holder of the company with the voting power of 6.34% on 28^th June 2019. Furthermore, the company announced that the funds under administration have grown to over $6 Bn. The non-custodial VMA Administration service was rolled out in order to supplement PPS’s market-leading non-custodial Virtual Managed Account solution.

A Look at Quarterly Update: Recently, the company, with the help of release, provided an update for the quarter ending March 2019. It reported combined quarterly gross platform inflows amounting to $744Mn. The UK/International gross platform witnessed inflows of $234 million.PPS reported $438 million net platform inflows for the quarter ending March 2019. Adding to that, the platform fund under administration stood at $8.9 Bn, reflecting the growth of 13% over the quarter from strong inflows and improving equity markets.


Platform Gross Inflows and Platform FUA (Source: Company Reports)

The company updated the market about the change of interest made by Director Michael Ohanessian by acquiring 58,000 shares at the consideration of $0.35 per share on 12^th June 2019. The total number of securities held by the Director after change stood at 15,523,054 ordinary shares.

Future Aspects: In terms of Australia, it is planning a new adviser dashboard. It is focused towards the investment universe of 1,300 model portfolios and single investment assets. It is focused on accelerating the top-line and bottom-line growth for the international business.

Stock Recommendation: With respect to international, the company is expecting considerable progress for WealthCraft CRM. The current ratio of PPS stood at 1.69x in 1H FY19 against the industry median of 1.58x. This implies that the Praemium Limited is in a good position to meet its short-term obligations in comparison to the broader industry. In the time span of three months and six months, it generated negative returns of 32.17% and 40.91%, respectively. As per the Australian Securities Exchange, the company’s stock price is trading closer to its 52-week lower levels of $0.320, proffering a decent opportunity for accumulation. Hence, in the view of aforesaid facts and current trading level, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.430 per share (up 10.256% on 2^nd July 2019).    

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