Wisr Limited

WSR Details

Business Highlights for Q4FY21: Wisr Limited (ASX: WZR) is a marketplace lender providing consumer finance products and services to Australian consumers via a Financial Wellness Platform. 

• Increase in Operating Revenue: WZR posted a record increase in revenue to $9.7 million in Q4FY21, up by 234% YoY.
• 20 Successive Quarters of Growth: The company reported 20 consecutive quarters of growth with new loan originations of $123 million in Q4FY21, up by 193% YoY.
• Vehicle Loan Growth: The company recorded an increase of 64% QoQ in the vehicle loan product to $36 million in the June 2021 quarter.
• Higher Loan Book: The total loan originations stood at $611 million as of 30 June 2021, up by 149% YoY. With the Q4FY21 addition, the total loan book (warehouse and securitised) has grown to $379 million, up by 342% YoY.
• ABS Transaction: WZR completed an issue of $225 million of asset-backed securities (“ABS”), consisting of AAA-rated top tranche. The deal has decreased the cost of funds by ~50% reduction.
• Platform Growth: The profiles on WZR’s Financial Wellness Platform grew to 450,000, up by 80% YoY in Q4FY21.
• Equity Raise: The company is well-capitalised with $55 million raise via a Placement and share placement purchase (SPP) in Q4FY21. WZR has $95.7 million of liquid loan assets and cash as of 30 June 2021.

Revenue & Net Loss After Tax from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• High Rate of Pre-Payment on Loans: Though WSR estimates a certain rate of pre-payment, however, a higher-than-expected rate of advance payment by borrowers could adversely affect its financial performance, operations, and business prospects.
• Unsecured Lending: WZR faces the risk of credit default and lack of collateral on the unsecured consumer finance products.

Outlook: WZR has set a target of a wholly-owned loan book of $1 billion in the medium-term.

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 WZR gave a positive return of 53.65% in the past six months. The stock is currently trading higher than the 52-weeks’ average price level band of $0.175 - $0.340. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price with a correction of single-digit (in % terms). We believe that the company can trade at a slight premium than its peer median, considering the decent Q4FY21 financial performance, platform growth, the newly launched website, and digital coverage of the Tokyo Olympic Games to reach to a broader audience in Q4FY21. For this purpose, we have taken peers like Credit Corp Group Limited (ASX: CCP), Money3 Corp Limited (ASX: MNY), Eclipx Group Limited (ASX: ECX), and others. Considering the current trading levels, increase in operating revenue, improved loan book metrics, growth of wellness platform, decent outlook, valuation, we suggest investors book profit and give a ‘Sell’ rating on the stock at the current market price of $0.315, as on 6 August 2021, 3:20 PM (GMT+10), Sydney, Eastern Australia).

WZR Daily Technical Chart, Data Source: REFINITIV 

QuickFee Limited

QFE Details

FY21 Results Release: QuickFee Limited (ASX: QFE) develops online payment portal products (QuickFee platform) for the accounting and billing firms in Australia and the US. The company will declare and publish results for FY21 on 26 August 2021.

Change in Substantial Shareholding: QFE notified that TIGA Trading Pty Limited had increased its shareholding from 12.75% to 14.08% on 19 July 2021.  

Key Takeaways from FY21 & Q4FY21:

• Higher Transaction Volumes: QFE reported 119% YoY growth in the US PayNow transaction volumes to US$668.4 million in FY21.
• Increase in the US Business: QFE recorded a 20% YoY increase in the US lending business to US$$15.6 million for FY21.
• Increase in Merchants: The active merchants using the company’s US platform in FY21 rose from 383 to 597, up by 51% YoY.
• More Active Customers: The number of active customers using QFE’s product grew from 91K to 195K in FY21, up by 114% YoY.
• Restructured Resources: QFE reported restructuring of sales staff and has now deployed teams across law and accounting new business, strategic channel alliances, account management, and marketing architecture for QFI (QuickFee Instalments).

Revenue & Net Income from FY18-FY20; (Analysis by Kalkine Group)

Key Risks:

• Financial Risks: As the company provides finance online to its consumers, it risks a payment default. In addition, QFE faces impairment risk, interest rate and forex changes on its loan receivables.
• Capital Adequacy Risk: The company needs capital to lend to its customers; hence, it faces capital adequacy risk.

Outlook:

• QFE anticipates stable growth in the US PayNow volumes, as it plans to deepen the existing merchant usage and grow new merchant signups.
• QFE’s new platform ‘ConnectAR’, developed in Q4FY21 for accounting firms, is also anticipated to increase the volumes of PayNow transactions in FY22. The ‘merchant direct’ application platform will be live in Q1FY22. The company will begin the beta-testing of ConnectAR in the next few weeks.

Stock Recommendation: The stock of QFE gave a negative return of 14.03% in the past month and a negative return of 15.51% in the past three months. The stock is currently trading lower than the 52-weeks’ average price level of $0.220 - $0.860. On a TTM basis, the stock of QFE is trading at a price to book value multiple of 1.9x, lower than the industry (Professional & Commercial Services) median of 2.9x, thus seems undervalued. Considering the current trading levels, increase in merchant signups, active customers, US PayNow transaction volumes & lending in Q4FY21, the launch of ConnectAR in Q1FY22, valuation on a TTM basis, and associated financial and regulatory risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.245, down by 2.001%, as on 6 August May 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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