Afterpay Touch Group Limited

APT Details

U.S. Market Launch Commences: Afterpay Touch Group Limited’s (ASX: APT) stock climbed up by 7.04 per cent on May 15, 2018 following the release of announcement on its ‘buy now, receive now, pay later’ services being introduced in the U.S. market with the help of its major launch partner “Urban Outfitters”. According to the release, Afterpay will commence transacting in the United States this week, at first online platform with intention to introduce in-store capability after gaining insight of the local retail sector and customer dynamic. In order to do this, Afterpay's contracts with retailers do not lock in any minimum sales volume. Further, Urban Outfitters, Inc. (URBN) is one of the largest lifestyle fashion retailers in the U.S. with total sales volume in the order of US$3 Bn across stores and digital channels in the US, which is broadly equivalent to the size of the total Australian online fashion market. URBN agreement is for a period of up to five years with a minimum of two year.

Recently, the group has also entered into a strategic relationship and new share issuance transaction with Matrix Partners (Matrix) wherein they invested approximately $19.4 Mn in Afterpay Touch in January 2018 with the objective of market development strategy in the first 12-month period.

Meanwhile, the Group successfully issued bonds of $50 million in April 2018, and this indicates that the Group has a strong balance sheet with a significant excess cash on hand and with a diversified funding source. In past six months, the price was up by 20.0 per cent and is trading at near to 52-week high level. Hence, we maintain our “Hold” recommendation at the current market price of $7.450, considering ongoing developments which will augur for growth in years to come.


Net Transaction Loss Analysis (Source: Company Reports)

 
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