Pushpay Holdings Limited

PPH Details

Completion of Splitting of Share: Pushpay Holdings Limited (ASX: PPH) provides donor and church management systems that include donor tools, finance tools and a custom community app. The market capitalisation of the company stood at ~$1.97 Bn as on 4^th December 2020. Recently, the company has completed a four-for-one share split, wherein, the shareholders would receive four PPH ordinary shares for each PPH ordinary share held on the record date of 26 November 2020. The company added that the share split is likely to improve liquidity in the market for its ordinary shares.

Decent Performance in 1HFY21: In 1HFY21, the company reported total revenue amounting to ~US$86.5 million, reflecting a rise of 51% over 1H FY20. Net profit for the half-year stood at US$13.4 million as compared to US$6.48 million in 1H FY20. In addition, the company recorded a total processing volume of US$3.2 billion. At the end of the half-year, the total customer of the company stood at 10,896, which comprised 8,489 in Donor Management System and 4,236 from Church Management System. During FY20, the company made decent progress in its strategic goal of becoming the preferred provider of mission-critical software to the US faith sector. During the year, the company reported revenue amounting to US$129.8 million, reflecting a rise of 32% over pcp. This was supported by the targeted implementation of its strategy, growing team capabilities and expertise, and responsible investment into product design and development.

Key Financials (Source: Company Reports)

Guidance: For the year ended 31^st March 2021, the company expects EBITDAF in the range of US$54.0 million and US$58.0 million as compared to the previous guidance range of US$50.0 million - US$54.0 million.

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

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company closed 1H FY21 with cash & cash equivalents of US$23.11 million as compared to US$9.88 million in 1H FY20, reflecting a rise of 134%. The stock of PPH has corrected 9.56% and 3.89% in the last one and three months, respectively. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of low double-digit (in percentage terms). For the purpose, we have taken peers such Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), and Bravura Solutions Ltd (ASX: BVS), to name a few. On a technical front, the stock has a support level of $1.67 and a resistance level of $2.04. Therefore, considering the decent growth in revenue, growth in customer and upgraded EBITDAF guidance, we give a “Buy” recommendation on the stock at the current market price of $1.725 per share, down by 3.632% on 4^th December 2020.

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

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