Wisr Limited

WZR Details

WZR Unique business Strategy: Wisr Limited (ASX: WZR) operates in the consumer lending sector and provides multiple collections of financial products. The majority of its business comes from writing loans for personal and secured vehicles for three to seven-year maturities. The company adopts the cost-effective channel by using Wisr Financial Wellness Platform, which is ~68% more cost-effective than the direct channel, providing it a competitive advantage.

• The loan organization recorded $158 million in Q3FY22, providing growth of ~63% PCP, which was achieved by company’s optimizing risk and leveraging data approach by using the Financial Wellness Platform for its growth.

Loan book growth, (Source: Analysis by Kalkine Group)

• Wisr over the period has reduced its risk from the loan book by showing improvement in quality of loans as the average credit score of customers improved each quarter.

Average Credit Score, (Source: Analysis by Kalkine Group)

• Wisr reported its second consecutive positive operating cash flow in Q3FY22 to $1.4 million and reported a strong EBTDA cash improvement of around 42% in H1FY22. The improvement is driven by investment in Financial Wellness Platform and its expansion.

Key risks:

• Rising Inflation and Tapering by FED could create pressure on RBA (Reserve Bank of Australia) to adopt a tightening monetary policy, but the company has hedged the majority of its exposure to interest rate risk.
• If margin did not improve in the near-term it could impact its competitive edge.

Outlook: WZR management aims to achieve a loan book of $1 billion as its short-term target with $3 billion set as a long-term target. The growth in the Wisr Wellness Platform will be the key driver of future growth as it acts as a valuable asset for loan conversion. Data is the fuel for growth, more data the company gets better the service it can provide using optimized solutions for both WZR and customers. 

Valuation Methodology: Price/Book Value 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 is trading below its 52-week low-high average of $0.087 - $0.340, respectively. The stock has been corrected by ~34.37% in the past one month. The stock of the company has been valued using the P/B multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight premium compared to its peers, considering WZR’s business model, loan growth, risk reduction approach, growth in Wisr Financial Wellness Platform, hedging strategy, etc. For the purpose of valuation, a few peers like Credit Corp Group Ltd (ASX: CCP), Prospa Group Ltd (ASX: PGL), Moneyme Ltd (ASX: MME), and others have been considered. Considering the indicative upside in the valuation, future growth prospects in the long run, loan growth, Average credit score improvement, blend of tech and data analytics, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.099, down ~5.714% as on 23^rd May 2022.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

WZR Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a 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 price

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