Splitit Payments Limited

North America Operations to Aid Future Growth:Splitit Payments Limited (ASX: SPT) is a technology company providing cross-border credit card-based instalment solutions to businesses and retailers.

What’s new with North America: Recently, the company has entered into partnership agreements to expand its operations in North America. An agreement has been entered into with Shopify to provide the Buy Now Pay Later solution to the later’s wide network of 800,000 merchants across 20 countries. Another agreement was signed with Divido, a global point-of-sale finance platform. As a part of the agreement, SPT will be offering its payment solution to more than 1000 merchants over Divido’s platform. In addition, SPT might also join the company’s multinational lending platform that connects lenders with retailers. Initially, the solution is expected to be launched in the UK and will make its debut in the US soon after.

The company also entered into a number of agreements with well-known US brands to expand its merchant network. Some of these brands included Eight Sleep, BlueFly, Ashford, Ace Marks, Nili Lotan, and Chili Technology.Moreover, to expand the application of its solution into the B2B market, the company has also signed an agreement with the accountancy services provider, 1800-Accountant, that provides a monthly instalment solution for the payment of customer invoices.

To further accelerate growth in the region, the company has also recruited a Head of Sales Engineering and two new sales executives in Canada.Also, to support the growing number of merchants and partners in North America, the company has expanded its customer success team. Currently, the company is looking for appointment of a new leader for North America.

During the six months ended 30 June 2019, the company generated revenue amounting to $1.14 million, up 293% on prior corresponding period. Gross profit for the period amounted to A$1.03 million, up 550% on pcp. In USD, revenue and gross profit amounted to US$0.79 million and US$ 0.72 million, respectively.


Income Statement (Source: Company Reports)
 
Stock Recommendation:The stock of the company generated returns of 78.57% over a period of 1 month and has a market capitalisation of ~$269.09 million. Currently, the stock is trading below the average of its 52-week trading range of $0.305 - $2.000. The new agreements and partnerships in North America are well aligned with the company’s strategy to build a base of active merchants across key verticals and achieve scale benefits through strategic partnerships. The company has seen good momentum in the region for the first eight months of operation, reflecting significant growth opportunities, going forward. Considering the above-stated factors and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $0.895, up 2.286% as on 24 October 2019.
 

Dicker Data Limited

Strong Performance across Vendor Partnerships:Dicker Data Limited (ASX: DDR) is engaged in wholesale distribution of computer hardware, software and related products. The company recently updated that Vladimir MITNOVETSKI, director of the company, acquired 7,092 ordinary shares for a consideration of $7.061 per share.

Q3 2019 Update: The company recently released an announcement, providing a market update for the quarter ended 30 September 2019. During the nine months ended 30 September 2019, the company generated total revenue amounting to $1,289.1 million, up 17.8% on prior corresponding period revenue of $1,094,7 million. Operating profit before tax for the nine months period, amounted to $47.4 million, up 38.6% on prior corresponding period value of $34.2 million.


Q32019 Results (Source: Company Reports)

Revenue growth for the period was aided by strong performance across all the vendor partnerships and full value realisation for new vendors. Particularly, the company witnessed strong growth in year-to-date subscription revenue.The company experienced a marginal increase in costs due to increased headcount investment, which is expected to continue into the fourth quarter to support new vendor additions and future growth. Year-to-date net profit margin was finalised at 3.7%.

Guidance for FY20: The company is expecting a strong exit from 2019, considering the continued strong growth year-to-date and results, tracking ahead of the forecasted number. Based on the results to date, the company expects FY19 full year operating profit to be over $60 million.

Stock Recommendation: The stock of the company generated negative returns of 12.03% and 0.43% over a period of 1 month and 3 months, respectively. Currently, the stock is trading close to the upper band of its 52-week trading range of $2.780 - $8.090 and has a market capitalisation of ~$1.12 billion. During the nine months ended 30 September 2019, the company reported decent growth in revenue on the back of strong vendor performance. Moreover, operating profit growth of the company is continuously tracking ahead of revenue growth. During the period, costs as a percentage of sales went slightly upward as compared to the half-year and are expected to increase further, due to the reasons cited in the above section. Given the aforesaid scenario, we have a wait and watch stance on the stock at the current market price of $7.200, up 3.597% on 24 October 2019, owing to the release of YTD numbers as at the end of September 2019.

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