Zip Co Limited

Company targets to increase transaction volume in FY19: Zip Co Limited (ASX: Z1P) is a payment solution provider. The company has recently announced that it will release its results for the half-year ended 31 December 2018 on Thursday 21 February 2019.
 
Also, in an earlier announcement, the company entered a partnership with CW Retail Services Pty Ltd (“Chemist Warehouse”) and under this Zip interest-free payments have been said to be offered to CW’s customers.Australian customers will have the option to use their Zip account to make interest-free payments when shopping online and in-store across Chemist Warehouse, My Chemist, My Beauty Spot & ePharmacy.
 
With regards to Q2 FY 2019, the company added that the transaction volume rose by 60% on QoQ basis to reach at the levels of $304.4 Mn. This was delivered on the back of a successful native app launch, the introduction of a large number of retail partners, enhanced marketing campaigns and the implementation of its marketing automation platform. The company’s quarterly Cash EBTDA rose to the levels of 1.7% of average receivables.
 

Key Business Drivers (Source: Company Reports)

What to Expect from Z1P: Going forward, in FY19, the company has an outlook to increase the transaction volume and customer growth targets and expand its Zip network. In addition, it would also work towards an increase in the customer engagement, capitalize on the favourable operating environment and funding diversification.
 
Meanwhile, the stock has risen by 45.16% in the past three months and has provided stellar returns to the investors.

Hence, considering thestrong outlook and robust stock’s returns over the past few months, we maintain our “Hold” rating at the current market price of $1.285 per share (down 4.815%on 20 February 2019).
 

Splitit Payments Ltd
 

All positives discounted at the current price juncture: Splitit Payments Ltd (ASX: SPT) has recently announced the appointment of Nathan Mairs as new VP of Sales US, to drive rapid growth in North America and beyond. Also, in an earlier announcement, the company stated that, for the Q4 CY18, the Underlying Merchant Transactions came in at $31,793,000, a rise of 52% on QoQ basis. This rise was on the back of continued rise witnessed in the number of Active Merchants and shoppers using Splitit’s solution. Also, the merchant fees came in at the levels of $423,000, a rise of 22% on a QoQ basis. This growth was delivered on the back of rise in merchant transactions.
 

 
 
 

Key Business Drivers (Source: Company Reports)

What to Expect From SPT: Going forward, in FY19, the company will continue to onboard new merchants on its platform & the global pipeline will continue to thicken with both direct and distribution channels shaping up in order to deliver significant results through 2019 and beyond. With high cart abandonment rates translating into billions of dollars in lost revenue for retailers across the globe, and as shoppers struggle to make their desired purchases while managing their cash flow, the company intends to meet both merchant and shopper needs.

Meanwhile, the stock has risen by 107.89% since its listing. However, in the span of previous five days, the company’s stock had delivered the return of -7.06%.

Considering thedecent outlook and the kind of rise in the short span we have seen in the stock price, we maintain our wait & watch stance on the stock at the current market price of $0.775 per share (down 1.899%on 20 February 2019).
 

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