QuickFee Limited 

QFE Details

FY21 Business Highlights: QuickFee Limited (ASX: QFE) is engaged in developing online payment portal products in the accounting and billing industries in Australia and the US. 

• QFE has reported robust growth in the US across its products, merchants, and customer numbers in FY21.
• The company has witnessed 579 active merchants using QuickFee’s US platform in FY21 against 383 in FY20. 
• In addition, active customers have risen to 195,000 in FY21 against 91,000 in FY20 who were using QuickFee US products.
• Lending in the US for Q4 FY21 was at US$4.3mn, up by 10% year-over-year, due to suppressed demand for lending amid government stimulus during the Covid-19 situation.
  

Change of Interests of Substantial Holder: QFE has announced on 11 June 2021 regarding a change in the interest of substantial holders. The substantial holders HTI Management Pty Limited, HTT Management Pty Limited and Kenneth Gray & Julianne Gray ATF has increased their holding to 7.65% in the company from 6.63% earlier. 

Change in Management: The company has announced on 9 June 2021 regarding a change in the management. Bruce Coombes has been transitioned to Managing Director, and Eric Lookhoff has joined as a CEO of the company, effective from 1 July 2021.  

1HFY21 Highlights:

• Increase in Net Interest Income – QFE has posted an increase in net interest income (NII) to $2.04mn in 1HFY21 against $1.92mn in 1HFY20 due to an increase in lending and transaction volumes.
• Rise in Cash Balance – QFE has witnessed an increase in its cash balance to $30.49mn as on 31 December 2020 against $14.97mn as on 30 June 2020.
• Incurred Losses – QFE has incurred a loss of $2.86mn in 1HFY21 against $1.79mn in 1HFY20 due to increased operating costs.

Net Interest Income Growth (Source: Analysis by Kalkine Group)

Key Risks: 

• Payment Default Risks: The company finance its consumers for its business growth. Hence, it carries a risk of default in payment.
• Capital Adequacy: The company requires capital to finance its customers, hence there is a risk of capital adequacy.
  

Outlook:  QFE is focused on new merchant sign ups and usage of existing merchants. As a result, the company is expecting a steady growth in US PayNow volumes. QFE has developed ConnectAR for key accounting firms in Q4 FY21, that is likely to drive increased volumes of PayNow transactions in FY22. QFE expects its “merchant direct” application platform to be live in 1QFY22.

Stock Recommendation: The stock of QFE gave a return of ~-44.57% in the last six months and a return of ~-55.33% in the last nine months. The current market capitalisation of QFE stands at ~$55.55mn as of 13 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.220-~$0.860. On a TTM basis, the stock of QFE is trading at a P/BV multiple of 1.7x, lower than the industry (Professional & Commercial Services) median of 2.9x, thus seems under-valued. Considering a significant rise in the US active costumers and merchants in FY21, expectation of higher volumes in FY22, increase in net interest income in 1HFY21, valuation on TTM basis, and current trading levels as well as key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.23, down by ~8.0%, as on July 13, 2021.

QFE 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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