Afterpay Touch Group Limited

Positive Outlook: Afterpay Touch Group Limited (ASX: APT) disclosed its business update for the three-month period ended 31 March 2018 wherein sales substantially grew by 400% and amounted to $1.45 billion in Q3FY18 against prior corresponding period ($290 Mn in Q3FY17). Further, the company has recorded merchant growth of 45% in Q3FY18 against pcp while the number of new customers grew by 30% in Q3FY18 from the prior corresponding period. The groupentered into a strategic relationship and new share issuance transaction with Matrix Partners (Matrix) wherein they invested around $19.4 Mn in Afterpay Touch in January 2018 with the objective of market development strategy in the first 12-months’ period.  We expect that the company has a fruitful year ahead as the company obtains repeat transactions from existing customers and new transactions from new customers. During the quarter, the company has developed and extended few key strategic partnerships with major brands to ensure its long-term sustainability in the market.


Partnership with Major Brands (Source: Company Reports)

The group has a strong balance sheet with a significant excess cash on hand and with a diversified funding source. Since the start of the year, the price was up by 58 per cent and the stock is trading at a point near to 52-week high level. APT stock has also been added to S&P/ASX200 Index, effective from June 18, 2018 as per June 2018 Quarterly Rebalance of the S&P/ASX Indices. Growth is also expected from the recently commenced online services in US market. Hence, we maintain our “Hold” recommendation at the current market price of $9.92, considering ongoing developments that involve expansions and new innovations which are the drivers of sustainable growth.

 
Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.