Stocks’ Details

Tyro Payments Limited

DHS Identifies TYR’s Medicare Easyclaim Claiming Services Tender:Technology focused and value-driven company, Tyro Payments Limited (ASX: TYR) supports Australian businesses with payment solutions and value-adding business banking products. Recently, the company informed the market that it has successfully dispatched holding statements to applicants under the offer. The trading of shares commenced on a normal settlement basis on December 13, 2019, and with this, the total number of quoted shares of TYR stands at 496,649,211. 

In another update, Danita R. Lowes and Grokco Pty Ltd, became substantial holders in the company with a stake of 5.44% and 13.72%, respectively, effective from December 6, 2019. On December 11, 2019, the Department of Human Services (DHS) informed the company that its tender for the provision of Medicare Easyclaim Claiming Services has been identified as successful. Subsequent to this development, a new contract is being prepared, which states that DHS will not pay Tyro a fee per transaction for Medicare claims processed via Tyro’s terminals. 

FY19 Key Highlights for the period ended June 30, 2019: Revenue for the period improved from $148,231,000 in FY18 to $189,770,000 in FY19. This can be attributed to a rise in fees and commission income plus interest income on loans. TYR reported a loss of $18,439,000 as compared to a loss of $17,146,000 in the previous year. Cash and cash equivalents at the end of the period stood at $23,900,000.


FY19 Income Statement (Source: Company Reports)

Stock Recommendation:TYR’s share recently listed on ASX, with its high and low level at $3.870 and $3.290, respectively.  Company’s key priorities and strategies for FY20 are focused on its payments and banking businesses. Considering the company’s business model, top-line performance, future growth prospects, recent updates and current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $3.620, down 0.549% on December 19, 2019.

Splitit Payments Ltd

Record Sale for SPT on Black Friday and Cyber Monday:Splitit Payments Ltd (ASX: SPT) is a technology company that provides cross-border credit card-based instalment solutions to businesses and retailers. On December 12, 2019, the company provided an update on its global operations, including Black Friday and Cyber Monday sales trading, new strategic partnerships and new merchant agreements. Its four-day trading period incorporating Black Friday and Cyber Monday recorded US$3 Mn in underlying merchant sales processed on its platform. The growth was strong, particularly in the company’s key market, US, where underlying merchant sales increased by 83% and initiated plans grew by 57% over the holiday weekend compared to last year. The period witnessed average order value (AOV) rising to US$820. The company anticipates AOV to remain slightly higher than average during the holiday period, before normalising in January 2020.

SPT signed an agreement with Magento, an Adobe company and leading provider of cloud commerce innovation to merchants. As per another partnership with iPay88, an NTT Data company and the leading online payments solution provider in Malaysia, SPT’s instalment solution will be offered to more than 15,000 online merchants in Malaysia. The initial trial is expected to begin by mid-2020, and may further expand to Philippines, Indonesia, Cambodia, Thailand and Bangladesh. Agreement with BlueSnap, a global payments technology company, will help SPT in integrating its instalment payment solution into BlueSnap’s All-in-One Payment Platform.

The company has continued to grow its merchant network across different consumer verticals in North America, Asia Pacific (APAC) and Europe, Middle East and Africa (EMEA).


September’19 Quarter Performance Metrics (Source: Company Reports)

September’19 Quarter Key Highlights:The company reported net operating cash outflow of US$6.9M for the quarter. There were cash inflows of US$0.5 million via receipts from customers, including fees and net repayment of upfront purchase amounts under the self-funding arrangement. Cash outflows amounted to US$ 1 million, on account of advertising and marketing costs.

Stock Recommendation: The stock is trading below the average of 52-week high and low level of $2.000 and $0.305, respectively. Its gross margin for H1FY19 stood at 90.4%, better than the industry median of 75.7%. Its debt to equity ratio for H1FY19 stood at 0.01x, lower than the industry median of 0.53x. Based on the decent past performance, current trading position, decent growth in merchant network and revenue-generation capabilities, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.655 per share, up 2.344% on December 19, 2019.

EML Payments Limited

EML Raises ~A$93 Mn via Retail Entitlement Offer:EML Payments Limited (ASX: EML) provides prepaid payment services in Australia, Europe and North America. It offers innovative financial technology, which provides solutions for payouts, gifts, incentives and rewards, and supplier payments.

On December 5, 2019, S&P Dow Jones Indices announced the inclusion of EML Payments Limited in the S&P/ASX 200 index in place of Bellamy's Australia Limited, subject to final court approval over the acquisition of BAL by China Mengniu Dairy Co. Ltd.

On December 4, 2019, EML successfully raised ~A$93 Mn in the Retail Entitlement Offer (REO). The offer comprised issuance of 26 Mn shares at a price of $3.55 per share. The shortfall under the REO will be allotted to the sub-underwriters of the REO.

FY19 Key Highlights for the Period Ended June 30, 2019:Group’s gross domestic value (GDV) rose by 34% to $9.03 Bn. Revenue for the period increased by 37% to $97.2 Mn. EBITDA for the period rose by 40% to $29.1 Mn.


FY19 Business Update (Source: Company Reports)

What to expect:The company expects revenue, EBITDA and NPATA for FY20 to be in the range of $116 million - $132 million, $38.5 million - $42.5 million and $26.2 million - $29.4 million, respectively.
Stock Recommendation: EML’s share posted a whopping YTD return of 192.91%, while in the span of three months, the stock delivered a return of 20.70%. The stock is inclined close to its 52-week high level of $4.840. Considering the company’s new contract signings, program implementations, product development in FY19 along with FY20 guidance and trading levels, we recommend a “Hold” rating on the stock at the current market price of $4.300, down 0.922% on December 19, 2019.

Praemium Limited

FUA for Sep Qtr Improved by 24%:Praemium Limited (ASX: PPS) provides accounting services to the world’s leading financial advisors, investment managers, institutions, accountants and product providers. Recently, Michael Ohanessian, director of the company, acquired 137,145 ordinary fully paid shares, taking the final holdings to 15,660,199 ordinary shares, effective from November 26, 2019.

September’19 Quarter Key Highlights:Funds under administration (FUA) increased by 24% to over $20 Bn for the first time. Quarterly gross inflows for the quarter were reported at $1.0 Bn, and quarterly net inflows for the quarter were reported at $558 Mn.


Quarterly Performance for PPS (Source: Company Reports)

Valuation Methodology: EV/Sales Multiple Approach

EV/Sales Multiple Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock gave a return of 38.96% in the past six months and a return of 10.31% in the last three months. EBITDA margin and ROE of the company stood at 18.2% and 11.6%, showing an improvement on the previous year margins of 15.9% and 7.6%, respectively. Considering the company’s improving margins, decent financial performance and current trading levels, we have valued the stock using a relative valuation method, i.e., EV to Sales multiple and arrived at a double-digit growth (in %). Hence, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.505, down 5.607% on December 19, 2019.

 
Comparative Price Chart (Source: Thomson Reuters)

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