QuickFee Limited

QFE Details
 
Extension of Lending Facilities in the US and Australia: QuickFee Limited (ASX: QFE) is a payment solutions provider that generates revenue from the QuickFee platform, allowing professional firms to accept monthly payment plans where clients obtain finance online from QuickFee Limited to facilitate invoice payments to the firm in full. The company has been operating for 11 years in Australia and 4 years in the US. To cater to the growing demand for its payment plans, the company recently increased its existing debt facilities in both the United States (US) and Australian markets. The company’s debt providers in both markets have increased the facility limit of debt funding. In US markets, the debt facility has been increased to US$10 million and in Australian markets, the total facility limit is A$25 million. 

Growth in US Markets: Lately, the company has been experiencing a growing acceptance of QuickFee’s online payment portal in the US, and this has been further accelerated by COVID-19 which has expedited the shift to online payments. Since February 2020, the company’s transaction volumes have more than doubled, and it now has more than 25% of the top 400 US accounting firms signed up on its platform.


Transaction value (USD) during COVID-19 Lockdown (Source: Company Reports)

$7.5 million Share Placement Completed: In May 2020, the company completed a $7.5 million share placement to fund new loan volume and technology development. The placement was strongly supported by new and existing institutional, family office and sophisticated investors. The placement comprises an offer of 35,714,286 fully paid ordinary shares at an issue price of $0.21 per share. Funds raised from the placement shall be used to reduce the impact of any potential restriction on credit availability as a result of COVID-19 and invest in new technology development initiatives. Below is a breakdown of how the Placement funds will be used:


Use of Funds (Source: Company Reports)

Key Risks: The company undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Further, the company is exposed to the risk of the potential non-performance by counterparties of contract obligations that could lead to a financial loss. 

Share Recommendation: The increase in the debt facility in US markets and the recent placement capital raising will provide QuickFee Limited a significant additional headroom to capitalise on the increasing demand for its payment plans in the US market. The stock is trading at a price to earnings multiple of 42.250x. The stock has increased by 186.84% in the last three months and is trading close to its 52-week high price of $0.650. Looking at the business developments and price appreciation in the past few months, it seems that most of the positive factors are already priced in at the current juncture. Further, the stock is trading at an EV/Sales multiple of 15.9x, significantly higher than the industry median (Professional and Commercial Services) of 2.1x, on TTM basis, demonstrating an overvalued position at the current levels. Hence,wehave a watch stance on the stock at the current market price $0.645, (up 18.349% on 3 July 2020) and suggest investors to wait for better entry levels.

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

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