FlexiGroup Limited

 
FXL Details
 
Improved Financial Performance aided by higher BNPL volumes: FlexiGroup Limited (ASX: FXL) offers financial solutions, primarily offered to retail and corporates. Products and services include Buy Now Pay Later, credit card offerings, consumer and corporate leasing. The company has been doing business in Australia for more than 30 years and has collaborations with over 65,000 sellers. FXL has a customer base of 1.7 million across Australia, New Zealand and Ireland.

FY19 Financial Highlights: FlexiGroup Limited announced its financial results for FY19 wherein, the company posted a net income of $372 million, up 2% y-o-y and statutory profit of $62 million as compared to a statutory loss of $9 million. During the year, the business reported active customers of 1.76 million, up 8% from FY18 while retail partners grew by 8% y-o-y to 65,000. FXL reported its transaction volume at $2.56 billion, up 12% on the prior year. During April 2019, the company launched its new product humm, which reported a robust growth of 19% since its inception with an average of 1,200 app downloads on a daily basis. During the year, Credit Card volumes across Australian grew by 10% y-o-y, while income from portfolio grew by 39% on pcp, aided by strong growth in receivables and a stellar y-o-y increase of 21% in interest bearing balances. The business witnessed cash NPAT in the AU card segment at $4.7 million, driven by strong top-line growth and reduced impairment costs.NZ Buy Now Pay Later (BNPL) volumes grew by 383% with significant retail participation from the farmers, Briscoes and Rebel Sport, and reported 114,000 customers, up 138% on y-o-y and 1,800 sellers, up 201% y-o-y. Credit Card volumes in New Zealand reported a double-digit growth at 12%, with interest-bearing balances reported 10% growth. During FY19 Consumer leasing NPAT came in at $5.1 million, aided by improved collection processes. Commercial leasing stood strong, with 10% volume growth on FY18 while cash NPAT was impacted by an impairment taken on one vendor program. In the Ireland market, the business reported tremendous volume growth of 77% on y-o-y, driven by the inclusion of new retail partners, namely Samsung, Harvey Norman, Woodies DIY and Coco Boutique. The segment reported 36,000 customers during the end of FY19, up 24% y-o-y while total sellers jumped 7% to 500.


FY19 Financial Highlights (Company Reports)

The company announced a fully franked dividend of AUD 0.03850000 for each ordinary share held. Annualized dividend yield of the stock stands at 3.81%.

Outlook: As per FY20 guidance, the Management expects at least 15% volume growth driven by new product launches, extension towards audiences and new collaborations. The business further expects a healthy balance of margin with growth while ROE is expected to come in at double digits.

Stock Recommendation: The stock of FXL is trading at $2.02 with a market capitalization of $774.98 million. The 52-week trading range of the stock stands at $0.975 to $2.120, and currently the stock is priced at the upper band of its 52-week trading range. The stock has given stellar returns of 18.82% and 46.91% during the last-three months and six-months, respectively. The stock is available at a price to earnings ratio of 12.70x as compared to the industry median of 15.1x. The enterprise value to sales multiple stands at 1.6x on trailing twelve months (TTM) basis as compared to the industry median of 15.1x. The business witnessed a robust volume growth in the BNPL segment, while new product humm created a higher customer traction. With 1.76 million client-base and more than 65 thousand retail partners, the business is expected to retain double-digit return on ROE. Looking at the valuation metrics and business prospects, we recommend a ‘Hold’ rating on the stock at the current market price of $2.020, up 2.799% as on 20 September 2019.

 
 FXL Daily Technical Chart (Source: Thomson Reuters)

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