Laybuy Group Holdings Limited

LBY Details

Q2FY22 Performance Update: Laybuy Group Holdings Limited (ASX: LBY) is a fintech company that provides BNPL services. It partners with over 12,000 retail merchants and has operations in New Zealand, Australia, and the UK. It has recently reported its Q2FY22 performance where it reported an improvement in most of the key metrics.

• The company reported an uptick in annualised GMV to ~NZ$825 million during the period, reflecting an increase of 62% over the pcp.
• Active merchants and active customers grew by ~86% and ~57% to ~11,700 and ~889,000 respectively, on y-o-y basis. There has been an improvement in repeat customers, which grew by 300bps from Q2FY21.
• There has been a substantial increase of 48% in the quarterly income to NZ$10.8 million during the period.

Trend in Revenue (Analysis by Kalkine Group)

Key Risks: The company’s line of business makes it prone to credit risks to its outstanding receivables, which can have an impact on its profitability.

Outlook:  BNPL offerings are still in the nascent stages in the global level and there is significant scope for growth. Moreover, the company seems well-positioned to leverage on the growing demand with a new UK debt facility being established from ‘Partners For Growth’ for £30 million. It also reported an increase to its ANZ debt facility from NZ$20 million to NZ$30 million by Kiwibank. LBY seems to be on track to achieve $1 billion in GMV for FY22, along with an acceleration of growth in the UK.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Stock Recommendation: The stock of LBY gave a negative return of ~18.96% in the past three months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.415 - $1.500. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the inherent risks associated with the industry, negative profitability, and uptick in cash cycle days. For the purpose of valuation, few peers like Openpay Group Ltd (ASX: OPY), Sezzle Inc (ASX: SZL), Douugh Ltd (ASX: DOU), and others have been considered. Considering the uptick in GMV, increase in active customers & merchants, debt funding sources, optimistic outlook and the key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing price of $0.425, down by 5.556% as of 11^th November 2021.

LBY Daily Technical Chart, Data Source: REFINITIV

Aeon Metals Limited

AML Details

Vardy Deeps Exploration Update: Aeon Metals Limited (ASX: AML) is engaged in mineral exploration and development. As per a recent announcement, the company has provided an update on the progress of the Vardy Deeps exploration activities on its Walford Creek Copper-Cobalt Project.

• Drilling activities identify new prospective horizons within the Walford Dolomite. The Group has observed low level of copper anomalism over two discrete horizons of 20 and 30 metres thickness.
• The positive results enhance the prospects of other targets along the Fish River Fault.

Drilling Update:

On 3 November 2021, the company has updated that the drilling for the ongoing metallurgical test work from the Vardy deposit has been completed. It has received the assays from the first 17 holes, which reflects the quality and continuity of the site. Hole WFDH493 intersected 92 metres at 1.75% recovered CuEq at 3m @ 1.36% CuEq from 27 metres, and furthermore at other levels.

September 2021 Quarter Update:

• During the period, the company witnessed commodity prices in the Walford Creek Project metal portfolio take an uptick, continuing its upward trend.
• The maturity date of OCP Asian loan facility has been extended by two years to 17 December 2023. AML has also raised $10.2 million in new equity via placement and Share Purchase Plan.
• It ended the period with a cash position of $6.570 million as of 30 September 2021.

Trend in PPE (Analysis by Kalkine Group)

Key Risks: The company is prone to funding risks and any challenge towards accessing equity or debt capital might impact the ability of the firm to continue its operations.

Outlook: The Morrison Government has announced ~$2 billion fund in order to aid the development of critical minerals and this is expected to benefit AML’s Aeon’s Walford Creek Copper-Cobalt Project. The company further anticipates potential structured copper mineralisation in Walford Dolomite unit. The base of the unit remains to be tested further.

Stock Recommendation: The stock of AML gave a negative return of ~26.47% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.048 - $0.165. On a TTM basis, the stock of AML is trading at a P/BV multiple of 0.7x, lower than the industry median (Basic Materials) of 2.5x. Considering the positive exploration updates from Vardy, extension of loan facility, equity raise, valuation on TTM basis, expected Government support and the key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current price of $0.049 as of 11^th November 2021, 11:15 AM (GMT +10), Sydney, Australia.

AML Daily Technical Chart, Data Source: REFINITIV

Note: The purple line at the bottom of the chart reflects the RSI (14-day period)

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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