Zip Co Limited

Z1P Details

H1FY21 Results Update: Zip Co Limited (ASX: Z1P) offers point-of-sale credit and payments to customers. The market capitalisation of the company as on 09 March 2021, stood at ~$4.92 billion. As per a recent update, the company has announced its H1FY21 results, which saw a record transaction volume (TTV) of $2,320.6 million, an increase of ~141% on the previous corresponding period. It reported decent revenue growth of ~130% to ~$160 million during the period. It delivered positive cash EBITDA during H1FY21. The loan book grew by a solid ~42% to $1.7 billion. The number of active customers stood at more than 5.7 million during the period end, an increase of ~217% on pcp. It has more than 38.5k merchants across the US, Australia, New Zealand and the UK.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company will remain focused on its key priorities of growth and product expansion, going ahead. With the acquisition of Quadpay, it has access to the US market and is set to accelerate on growth in FY21. It has a decent pipeline of global retail partnerships and will further look for new opportunities and strategic partnerships to expand its footprint.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 company has raised $176.7 million via a placement and share purchase plan (SPP) to retail and institutional investors. This will help the company to drive growth as it enters the second half of FY21. As per ASX, the stock of Z1P is trading above its average 52-weeks’ levels of $1.050-$14.530. The stock of Z1P gave a positive return of ~30.07% in the past six months and a positive return of ~1.15% in the past one month. On a technical analysis front, the stock of Z1P has a support level of ~$8.208 and a resistance level of ~$10.043. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the decent increase in revenue, growth in TTV and expected synergy from Quadpay acqusition. For the purpose, we have taken peers such as WISR Limited (ASX: WZR), AMP Limited (ASX: AMP), Sezzle Inc (ASX: SZL), to name a few. Considering the current trading levels, indicative upside in valuation, robust financial performance, an increase in loan book and the benefits from the acquisition of Quadpay, we recommend a ‘Hold’ rating on the stock at the current market price of $8.780, down by 1.570% as on March 09, 2021.

Z1P Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

MyFiziq Limited

MYQ Details

H1FY21 Performance Update: MyFiziq Limited (ASX: MYQ) is engaged in the development of its mobile phone-based technology, where the user can scan their body through the mobile camera and know about their anatomy. The market capitalisation of the company as on 09 March 2021, stood at ~$245.58 million. The company reported a revenue of $887,092 during the first half of FY21, compared to revenues of $354,447 in the prior corresponding period. The net loss widened to $5.47 million during the period, from a loss of $2.94 million on pcp. The company has completed a placement of $5 million from institutional and sophisticated investors on 19 October 2020. The cash position of the company as on 31 December 2020 stood at $4.7 million. It also reported an improvement in the net cash outflow from operating activities to $1.17 million.

Business Highlights from H1FY21 (Source: Company Reports)

Outlook: The company considers that it has sufficient capital to facilitate the expansion of its research and development team. The company expects its Evolt App to commence its marketing activities over the upcoming quarter. Moreover, it expects to launch a few additional Apps (Truconnect, Nexus-Vita) in the coming quarters.

Stock Recommendation: As per a recent update, the company has signed a binding term sheet with China-based Tinjoy Biotech Limited, which grants Tinjoy access and distribution rights to the MyFiziq CompleteScan platform. As per ASX, the stock of MYQ is trading above its average 52-weeks’ levels of $0.065-$2.190. The stock of MYQ gave a positive return of ~104.02% in the past three months and a positive return of ~71.30% in the past one month. On a technical analysis front, the stock of MYQ has a support level of ~$1.849 and a resistance level of ~$2.076. The stock is in the overbought region, and we can expect a correction in the price levels in the near term. We suggest investors who have a position on the stock to book profits. Considering the steep returns in the past few months, current trading level and an improvement in the debt-to-equity ratio, we believe that most of the positive factors have been discounted at the current juncture. Hence, we suggest to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $2.03, up by 8.556% as on March 09, 2021.

MYQ Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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