Wisr Limited

WZR Details

Delivered Growth Across Key Metrics in Q2FY22: Wisr Limited (ASX: WZR) offers loan products for various personal needs and helps consumers pay their debts via its proprietary financial wellness platform.

• The loan originations rose to ~$136 million, up by ~62% Y-o-Y on Q2FY21 in the seasonally weaker December 2021 quarter. WZR has been registering loan growth for the last 22 consecutive quarters.
• The secured vehicle loans (SVL) rose by ~129% Y-o-Y to ~$48 million in the quarter. The secured vehicle warehouse loan book stood at ~$161 million as of 31 December 2021.
• The wholly owned loan book (warehouse, securitised and balance sheet) rose to ~$562 million in Q2FY22 versus ~$210 million, up ~168% Y-o-Y.
• The company depicted a robust credit performance with the 90 plus day arrears consistently low at ~0.81% as of 31 December 2021.

Loan Book (excluding ~$34 million off-balance sheet as of 30 December 2021); (Analysis by Kalkine Group)

Key Risks: The company might facethe risk of an increase in arrears outstanding and bad debts in the portfolio. A decline in the value of financial assets, regulatory changes, and higher spending on technological/platform investment may impact the financial performance of the business.  

Outlook:

• The company has plans to invest further in the financial wellness platform, introducing more new features. In FY22, WZR targets to deliver ~1 million customers on the platform and deliver operational leverage at scale.
• WZR plans to provide a wider set of solutions besides debt management. It is identifying new revenue streams and commercialisation models from its platform while simultaneously driving growth from its lending business.
• The 1HFY22 results will be published on 28 February 2022. WZR plans to hold an investor briefing at the said date on 10.00 am hosted by the CFO and CEO.

Valuation Methodology: Price to Book Value Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of WZR gave a negative return of ~37.49% in the past three months and a negative return of ~46.42% in the past six months. The stock is currently trading near its 52-weeks’ support level of $0.142. The stock has been valued using the Price to Book Value based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight premium than its peers’ average P/E multiple, considering the record growth in revenue, increasing loan book growth, and plans to grow customer profiles and launch more features on the platform in 2022. For this purpose of valuation, a few peers like Zip Co Ltd (ASX: Z1P), Money3 Corp Ltd (ASX: MNY), Eclipx Group Ltd (ASX: ECX), and others have been considered. Considering the current trading levels, record growth in revenue, loan book, positive operating cashflows, and plans to invest and grow the proprietary platform, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.150, down by ~6.251 % as of 23 February 2022.

WZR Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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