Stocks’ Details

Quickfee Limited

Decent Growth in US Lending: Quickfee Limited (ASX: QFE) is in the operation of payment platform and SME lending via provisioning of finance. The market capitalisation of the company stood at ~$112.90 Mn as on 15^th October 2020. The company generates revenue from its technology platform and fee funding lending solution, allowing clients of professional service firms to pay invoices up-front or over time. Despite the COVID-19 pandemic, the company managed to achieve a fourth consecutive quarter of record lending in the United States with the lending of US$4.1 million in Q1 FY21, reflecting a rise of 91% over pcp. This was due to a combination of new firm activations and increased lending from existing firms. However, lending in Australian operations have been affected by government stimulus measures in response to the COVID-19 pandemic. During the same quarter, the company experienced growth in signing up new firms on the QuickFee US platform. Active firms as on 30^th September 2020, stood at 457, reflecting a rise of 11% over pcp.

US Lending Growth (Source: Company Reports)

Completion of Capital Raising: Recently, the company has finished capital raising of $17.5 million, comprising $15 million via a share placement and $2.5 million through SPP (Share Purchase Plan). These funding would allow the company to add significant scale to its customer acquisition team and finance the anticipated growth of the receivables book.

Outlook: The company is well-positioned to become a market leader in the Advice Now, Pay Later market. Moreover, the company’s investment in technology is likely to generate further growth in business. The company has scheduled to conduct its annual shareholders meeting on 27^th November 2020.

Stock Recommendation: The company’s partnership with Splitit Limited for new “interest-free” product is likely to expand the target market and generate lending growth. As on 30^th June 2020, the cash balance of the company stood at $15.0 million as compared to $2.8 million as on 30^th June 2019. During FY20, QFE strengthened its debt facility limit to $25.0 million in order to finance further growth. In the last one and three months, the stock of QFE has corrected 17.35% and 25.92%, respectively. The 52-week low-high range of the stock stands at $0.130 - $0.975, respectively. On a technical front, the stock of QFE has a support level of ~$0.491 and a resistance level of ~$0.575. Therefore, considering the decent growth in US lending, recent capital raising, partnership with Splitit and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.505 per share, down by 2.885% on 15^th October 2020.

Fintech Chain Limited

Rising Coverage in China: Fintech Chain Limited (ASX: FTC) is involved in the provisioning of online and offline transaction authentications. The market capitalisation of the company stood at ~$65.07 Mn as on 15^th October 2020. During the quarter ended 30^th June 2020 (Q1 FY21), the company experienced consistent demand for its T-Linx^TM deployment from bank customers. On the back of existing bank customers, FTC is increasing T-Linx^TM coverage in more China regions and merchants. During June 2020 quarter, the company reported an overall negative cash flow, owing to the adverse impact of the COVID-19 pandemic. The company possesses financial support of its major shareholders, Mr. Xiong Qiang and Mr. Chow Ki Shui Louie, who will provide additional funding to the company, if required.

During FY20, the company reported revenue amounting to RMB35.63 million as compared to RMB44.18 million in FY19. Despite the COVID-19 pandemic, the company witnessed a rise of 36% in net profit and total comprehensive income to RMB3.2 million in FY20.

Key Financials (Source: Company Reports)

Outlook: Looking forward, FTC is focused on increasing its overall banking market share in Greater China and overseas. In addition, FTC would continue to enhance its T-Linx^TM related products and services.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at RMB$3.79 million as compared to RMB$2.29 million as on 30^th June 2019. FTC ended the year with a total debt balance of RMB$25.23 million against RMB$27.02 million in FY19. The 52-week low-high range for the stock stands at $0.061 - $0.190, respectively. In addition, the stock of FTC has provided returns of 39.24% and 29.41% in the one and three months, respectively. FTC has EV/Sales multiple of 9.2x as compared to the industry average (Investment Banking & Investment Services) of 13.9x on TTM basis. On a technical front, the stock of FTC has a support level of ~$0.100 and a resistance level of ~$0.115.  Therefore, in light of the consistent demand for products, financial support and outlook, we give a “Hold” recommendation on the stock at the current market price of $0.110 per share, up by 9.999% on 15^th October 2020. 

Douugh Limited

Commencement of Trading on ASX: Douugh Limited (ASX: DOU) is a purpose-led fintech and next-generation neobank. On 6^th October 2020, the stock of Douugh Limited (formerly, Ziptel Limited) has commenced trading on ASX with the heavily oversubscribed capital raising of $6 million. The company would use these funds to grow its U.S. customer base and for investment in R&D to enhance its AI-driven banking platform.  The commencement of trading follows the acquisition of Douugh Limited by Ziptel Limited. All the considerations like 275,000,000 fully paid ordinary shares in ZIP, 75,000,000 performance shares 75,000,000 unlisted options have been paid by the Ziptel.

Use of Proceeds (Source: Company Reports)

Rising Demand for Digital Banking: In a recent presentation, the company stated that COVID-19 pandemic has decreased the use of cash and grown the use of the debit card and mobile payments. The company has witnessed growth in awareness and demand for digital banking and investment services as a result of lockdown. In addition, the company managed to decrease its overheads and increase productivity, which was supported by the impact of social distancing and lockdown restrictions.

FY20 Highlights: For the year ended 30^th June 2020, the company reported total revenue (which includes other income) amounting to $1,419,919 as compared to $729,609 in FY19. Operating expenditure for the period amounted to $2,605,664 against $2,279,894 in FY19. This was mainly increased as a result of the rise in the development costs of the product. DOU recorded net loss of $1,299,600 as compared to $1,550,285 in FY19.

Key Financials (Source: Company Reports)

Outlook: Going forward, the company would continue the development of its smart mobile banking app for commecialisation. In addition, it would be focused on the USA market followed by Australian and other markets.

Stock Recommendation: As on 30^th June 2020, the cash reserves of the company stood at $172,136 as compared to $649,105. The company believes that it is capable of settling its creditor as and when due, owing to future business activity. The stock of DOU is inclined towards its 52-week high level of $0.235. On a technical front, the stock of DOU has a support level of ~$0.047 and a resistance level of ~$0.232.  Therefore, considering the recent commencement of trading on ASX, rising demand for digital banking, outlook and current trading level, we give a “Hold” rating on the stock at the current market price of $0.220 per share, up by 37.500% on 15^th October 2020, owing to the recent commencement of trading on ASX. 

Daily Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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