Openpay Group Ltd

OPY Details

Strong Operational Performance: Openpay Group Ltd (ASX: OPY) provided payments technology, which offers a Buy Now, Pay Later product. The market capitalisation of the company stood at $247.34 million as on 9^th December 2020. Recently, the company has provided a trading update for October and November 2020, wherein, it stated that the business has continued the trend of strong performance. The company ended October 2020 with 1,149k local Active Plans, which moved up by 233% over pcp and the local Active Customers increased by 143% to 390k. In addition, the company recorded a rise of 34% in Active merchants to 2,346, while TTV rose by 101% on pcp to $25.8 million. These strong operational performances were fueled by strong customer demand and merchant acquisition. During the same period, the company entered partnerships with major Australian retailer Kogan.com Ltd and US SaaS eCommerce group, BigCommerce Holdings Inc.

For the quarter ended 30^th September 2020 (Q1 FY21), the company reported revenue amounting to $6.2 million, reflecting a rise of 68% over pcp. Also, the company’s active plans stood at 1,060k, which indicated a growth of 235%. With respect to the UK, the company also inked merchant partnerships with The Hut Group and Shopto and English Premier League clubs Fulham Football Club and Wolverhampton Wanderers F.C.

Key Metrics (Source: Company Reports)

Outlook: Going forward, the company will continue to leverage its strong investment in the growth of the business as well as further deliver on the three strategic growth pillars such as continued local expansion, geographic expansion, and Platform enrichment.

Key Risks: The company’s business is highly sensitive to the stiff competition arising from its peers. In addition, the advancement of technology may also create a headwind for business. Also, below expected performance of third party may impact the business growth as the company provides its services by partnering with the third parties.

Stock Recommendation: Looking ahead, the company will continue to focus on enterprise and platform partners. As on 30^th September 2020, the cash balance of the company stood at $64.7 million as compared to $70.1 million as on 30^th June 2020. The 52-week low-high range for the stock stands at $0.320 - $4.980, respectively. The stock of OPY has corrected 20.27% in the last one month. On a technical analysis front, the stock has a support level of ~$2.068 and resistance level of ~$2.889. Therefore, based on the aforesaid facts, decent growth witnessed in active plans and merchants, recent partnerships, positive outlook, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at a current market price of $2.270 per share, down by 0.874% on 9^th December 2020.

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

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