Zip Co Ltd

Strong Performance in November: Fintech group, Zip Co Ltd (ASX: Z1P) expects to drive towards more than $1 billion of annual transaction volume, more than 1 million consumers with an active Zip account, and maintain rapid growth along with positive cashflow in FY19. The company also aims to increase the consumer engagement for the planned rollout of native app and boost significant monthly active usage. Z1P has planned to complete the roll out of the new Zip brand, increase the awareness about it and eventually, enhance the market share in FY 19. Moreover, November is the first month to witness $100 million ever. The company continues to deliver strong performance supported by growth across all key metrics, comprising of revenue, transaction volume, consumers and retail partners. The group aims to benefit from the scenario wherein the credit card model is now facing headwinds.
 
Meanwhile, Z1P stock has fallen 5.21% in three months as on December 10, 2018 and again slipped post some rise seen in last one month. The stock is trading at the price of level $1.02, and has support around $0.7 and resistance around $1.3. Based on the 2019 targets and existing volatility, we give a “Hold” recommendation on the stock at the current price of $ 1.02, up 2% on December 11, 2018.
 

Outlook (Source: Company Reports)
 

EML Payments Ltd

Decent FY 2019 Financial Guidance: EML Payments Ltd (ASX: EML) for FY 19 expects EBTDA to be in a range A$26 - 28m, which represents a growth of 25 - 35% on prior corresponding period and revenue is expected to be in the range of $82 - $88 m. For FY 19, the company expects contribution of major German malls customer ECE and lower Gross Debit Volume (GDV) in North American malls in line with previous years, offset in large part by higher interchange revenues & incremental revenue in the VANS segment. Further, for FY 19, EML expects LulaRoe (LLR) contribution to be down approximately 25% on pcp, minimal contribution from launches of EU & US gaming programs, minimal contribution from Caesars program (launched in late Q4 FY18) and rise in overhead costs due to senior management hires & acquisitions. FX rates are expected to remain in line with October 2018 rates and no significant movement is expected in central bank interest rates in Australia, US or UK during FY 19.

FY 2019 Financial Guidance (Source: Company Reports)
 
Despite few shortcomings, the group aims to attain the EBTDA target. Meanwhile, the stock is trading at the price of level $1.36, and has support around $1.25 and resistance around $1.6. EML stock has fallen 18.29% in three months as on December 10, 2018. Based on the opportunity in the industry space and possibility of a leverage from prevailing headwinds against the major financial groups, we give a “Speculative Buy” recommendation on the stock at the current price of $ 1.360.
 

Comparative Stock Price Chart (Source: Thomson Reuters)
 
 

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