Openpay Group Limited

OPY Details

This report is the updated version of the report published on 27 May 2022 at 3:55 PM GMT.

Equity Raising in Process: Openpay Group Limited (ASX: OPY) offers an omnichannel financing solution to provide BNPL (buy now pay later) payment solutions such as BNPL 2.0 (product).

Capital Raising Summary; (Analysis by Kalkine Group)

Business Update for April 2022: OpyPro, the B2B trade finance (SaaS) platform, witnessed a rise in trade accounts (up ~131% on pcp basis) and a ~533% increase vs pcp in monthly TTV in April 2022.

Growth Trend of TTV; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of synergies from the acquisition, increased growth investments, expansion risk, and technological changes.

Outlook: OPY is progressing well towards core profitability generation in ANZ by June 2023. In the US, OPY has partnered with Keefe, Bruyette & Woods (KBW), a US investment bank, to develop capital strategies, in order to strengthen its foothold in the country.

Valuation Methodology: EV/Sales 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 OPY gave a negative return of ~38.15% in the past three months and is currently trading at par to its 52-weeks’ low level of $0.230. The stock has been valued using the Enterprise Value to Sales 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 discount than its peers’ mean EV/Sales multiple, considering its continuing negative net margins, negative ROE, and a high debt-to-equity ratio. For this purpose of valuation, a few peers like Eclipx Group Ltd (ASX: ECX), Sezzle Inc (ASX: SZL), Pioneer Credit Ltd (ASX: PNC), and others have been considered. Considering the current trading levels, growth in key metrics across ANZ and the US markets as per the April 2022 trading update, plans to turn profitable in ANZ, expansion in the US, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.230, as of 27 May 2022, 3:05 PM (GMT+10), Sydney, Eastern Australia.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

OPY 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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