Wisr Limited

WZR Details

Change in Director’s Interest: Wisr Limited (ASX: WZR) works in neo-lending and financial technology company that offers financial products and services. On 15^th March 2022, Matthew Brown acquired 125,000 fully paid ordinary shares at $0.15 per share of consideration.

1HFY22 Results:

• Record Loan Origination: With the growth of 22 consecutive quarters of new loan origination, loans rose to ~$268 million, up by ~84% on 1HFY21.
• Balance Sheet Items: With the $24.83 cash receipts from customers, the cash balance stood as $75.27 million as of 31^st December 2021.

Key Metrics (Analysis by Kalkine Group)

Key Risks: The company faces the risk of an increase in arrears outstanding and bad debts in the portfolio. A decline in the value of financial assets, regulatory changes, and higher spending on technological/platform investment may impact the financial performance of the business.  

Outlook: After transferring loan book of $127 million from H1 to H2, an additional capacity of $127 million is created in H1 to fund future growth in the personal loan book.  The company targets a $1 billion loan book in near term.

Valuation Methodology: Price/Sales Value 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 negative return of ~21.95% in the past three months and a negative return of ~34.69% in the past six months. The stock is currently trading near its 52-weeks’ low level of $0.132. The stock has been valued using the Price/Sales Value 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 than its peers’ average P/E multiple, considering the record growth in revenue, increasing loan book growth, and improving cash cycle days and current ratio. For this purpose of valuation, a few peers like Zip Co Ltd (ASX: Z1P), Money3 Corp Ltd (ASX: MNY), Eclipx Group Ltd (ASX: ECX), and others have been considered. Considering the current trading levels, record growth in revenue, growing loan books, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.155, up by ~3.333 % as of 21 March 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

WZR Daily Technical Chart, Data Source: REFINITIV 

Openpay Group Limited

OPY Details

Change in Substantial Shareholding: OpenpaVy Group Ltd (ASX: OPY) runs its business into BNPL (Buy Now Pay Later) sector catering automotive, healthcare, home improvement, memberships and education industries. It was listed on ASX in 2019. On 8^th March 2022, Credit Suisse Holdings (Australia) Limited ceased to be the substantial shareholder of the company.

1HFY22 Updates:

• Quarterly Rebalance: As per the 4^thMarch 2022 news, OPY was removed from the “All Ordinaries Index”, effective from 21^st March 2022.
• Growth in the Revenues: The company marked $15.2 million revenue for its 1HFY22 and ~57% growth in active merchants. With the signing of major platforms and aggregating partners, OPY’s active customers increased by~23%, thereby ~44% increment in its TTV (Total Transaction Value) also hiked to $160 million, backing by strong growth across all key verticals and market leading unit economics.
• Improvement in Net Transaction Loss: Though the net loss for the half-year increased to ~$41.99 million in 1HFY22, however the net transaction loss (NTL) rate improved significantly from -2.3% on pcp to -1.4% of TTV.
• Cash Balance: The cash balance stood as $32.1 million at the end of 31^st December 2021.

1HFY22 Key Highlights (Source: Analysis by Kalkine Group)

Key Risks:

• Competition from Peers: The company works in a very competitive environment, which leads to a risk of new providers or existing competitors providing a comparatively superior solution or experience.
• Regulatory Risk: OPY is exposed to complex regulatory environment as it deals in the payment’s solution, which is being regulated by the authorities.

Outlook:  OPY suggested that the US market will be the main growth market opportunity for the Group. To concentrate on the AUS & US market, OPY strategically decided to reduce its UK operations materially and capital to be re-invested in Australia and the US. The company expects its CAGR of ~72% growth (from FY17 to FY22) in its ANZ TTV, whereas is on path to become profitable in the ANZ market.

Valuation Methodology: Price/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 company is trading close to its 52-week low-high average of $0.310. The stock of OPY has been corrected by ~71.82% in past six months. The stock has been valued using P
Price/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ median Price/Sales multiple, considering the negative ROE and negative margins. For the purpose of valuation, peers such as Moneyme Ltd (ASX: MME), Prospa Group Ltd (ASX: PGL), and others have been considered. Considering the expected upside in valuation, rising active customers and merchants, growth in revenue, record growth in TTV, collaboration with American Express, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.350 as on 21 March 2022, 11:50 AM (GMT+10), Sydney, Eastern Australia. Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

OPY 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 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 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 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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