EML Payments Limited

 

EML Details
 
Sales Revenue up 37% in FY19: EML Payments Limited (ASX: EML) offers prepaid payment services in Australia, Europe and North America. It creates instant and secure payment solutions that help customers to connect with each other anytime and anywhere. On 11 December 2019, David Liddy, Director of the company, acquired 160,000 ordinary fully paid shares for a total consideration of $568,000, taking the final holdings to 960,000 ordinary shares.
 
Key Highlights of FY19 for the Period Ended June 30, 2019: The Group’s gross domestic value (GDV) in FY19 came in at $9.03 billion, up 34% year over year. The company reported revenue of $97.2 million, up 37% year over year. EBITDA for the period stood at $29.1 million, up 40% year over year. NPAT for FY19 came in at $8.45 million, representing a substantial increase of 283% year over year.
 

FY19 Financial Highlights (Source: Company Reports)
 
Cash flow Highlights: Cash flow from operating activities came in at $29.16 million as compared to $6.37 million in FY18. Cash used in investing activities and cash inflow from financing activities came in at $49.82 million and $15.01 million, respectively, in FY19.
 
Outlook: The company anticipates revenue, EBITDA and NPATA for FY20 to be in the band of $116 million - $132 million, $38.5 million - $42.5 million and $26.2 million - $29.4 million, respectively.
 
Valuation Methodology:EV/Sales Multiple Approach
 

 EV/Sales Based Valuation (Source: Thomson Reuters)
 
 Note: All the forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation:As per ASX, the stock gained 215.9% in the past one year. As on 08 January 2020, the company’s market capitalisation stands at ~$1.51 billion, with 325.42 million outstanding shares. Its debt to equity ratio for FY19 stood at 0.10x, better than the industry median of 0.56x. Considering the performance in FY19, decent outlook, and financial stability, we have valued the stock using EV/Sales based relative valuation method and for the purpose, have taken the peer group - NEXTDC Ltd (ASX: NXT), Megaport Ltd (ASX: MP1) and Codan Ltd (ASX: CDA). Therefore, we have arrived at a target price with an upside of lower double-digit (in % terms). Hence, we give a “Hold” recommendation on the stock at the current market price of $4.80 per share, up 3.226% as on 08 January 2020.

 
EML Daily Technical Chart (Source: Thomson Reuters)
 
 

NEXTDC Limited

 

NXT Details
 
FY19 Revenue Growth at 15%:NEXTDC Limited (ASX: NXT) is a technology company, involved in building, developingand operating independent data centre facilities in Australia.
 
FY19 Highlights for the Period Ended June 30, 2019: The company’s revenue went up by 15% year over year and came in at $179.3 million. Underlying EBITDA increased 13% on a yearly basis and stood at $85.1 million. Underlying capital expenditure stood at $378 million, up from $285 million in FY18. The company’s sale from contracted utilisation reached 52.5MW in FY19, representing an increase of 31% on FY18. Interconnections in FY19 stood at 10,972, up 27% on pcp. The company exited FY19 with cash and cash equivalents of $399 million.
 

FY19 Key Highlights (Source: Company Reports)
 
Outlook:For FY20, the company expects revenue, underlying EBITDA and capital expenditure to be in the range of $200 million - $206 million, $100 million - $105 million and $280 million - $300 million, respectively.
 
Valuation Methodology:Price to Book Value Multiple Approach
 

Price to BookBased Valuation (Source: Thomson Reuters)
 
Note: All the forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: As per ASX, the stock gave a return of 8.2% in the one year.Currently, the stock is trading above the average of its 52-week high and low of $7.250 and $5.71, respectively.  As on 08 January 2020, the company’s market capitalisation stands at ~$2.32 billion, with 345.39 million outstanding shares.In FY19, EBITDA margin of the company stood at 52.4%, higher than the industry median of 28.4%. Current ratio of the company was 7.04x as compared to the industry median of 2.81x, which implies a better liquidity position of the company.Considering the above scenario, we have valued the stock using price to book value based relative valuation method and for the purpose, have taken the peer group - EML Payments Ltd (ASX: EML), WiseTech Global Ltd (ASX: WTC), Over the Wire Holdings Ltd (ASX: OTW), etc. Therefore, we have arrived at a target price with an upside of lower double-digit (in % terms). Hence, we give a “Buy” recommendation on the stock at the current market price of $6.570 per share, down 2.377% as on 08 January 2020. 
 
 
NXT Daily Technical Chart (Source: Thomson Reuters)
 
 

Freelancer Limited

 

FLN Details
 
Cash Receipts Soared 9.4% in Third Quarter:Freelancer Limited (ASX: FLN) provides an online outsourcing marketplace and escrow payment services. On 20 December 2019, Simon Clausen, director of the company, acquired 157,866ordinary fully paid shares for a consideration of $0.597 per share.
 
Key Highlights of 3QFY19:In the third quarter ended 30 September 2019, the company reported cash receipts of $14.3 million, an increase of 9.4% year over year. The company reported Freelancer Group Gross Payment Volume (GPV) of $197.8 million, which increased 5.4% year over year. Gross Payment Volume increased 7% to $45.7 million during the quarter. Escrow segment reported a GPV of $152.1 million, up 4.9% year over year. Net operating cash outflow for the quarter came in at $1.5 million. The company exited the quarter with cash and cash equivalents of $33.8 million.
 
1HFY19 reported a record GPV and net revenue of $400 million and $28.7 million, respectively, representing an increase of 11% and 16% on prior corresponding period.
 

1HFY19 Highlights (Source: Company Reports)
 
Stock Recommendation: As on 08 January 2020, the company’s market capitalisation stands at ~$251.28 million, with 452.76 million outstanding shares.Over a period of one month, the stock generated negative returns of 9.76%. For the coming quarter, Escrow remains optimistic about the money transmission licenses to be approved in two more states. Considering the performance in 1HFY19 and 3QFY19, decent growth in cash receipts and Escrow segment outlook, we recommend a “Speculative Buy” rating on the stock at the closing price of $0.555 per share as on 08 January 2020.


 
FLN Daily Technical Chart (Source: Thomson Reuters)

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