In respect to regulatory concerns, SPT is the least likely to be affected. Firstly SPT has almost no presence to date in Australia, indeed most of the new merchants and customers being targeted are in the US and Europe. Secondly, in its simplest terms, SPT operates a payments 'gateway' between the credit card company and the customer. SPT do not have any direct credit exposure to the customer hence are unlikely to experience regulatory scrutiny.
Hi Dragan, I've been crunching my numbers from the 4C cashflow statements which do differ from the revenue figures in the P/L. Given the 4C in FY17 was $0.9m above the P/L revenue, it will be interesting to see what discrepancy there is in FY18 when LVT's P/L is reported in the coming weeks.
Hi Alex, your comparison of APT to a traditional credit card business is quite common. There are a couple of nuances of the APT business model that are important and, I believe, make the company a markedly superior investment proposition. Firstly the payback cycle on any APT transaction is remarkably rapid, just 6 weeks in total. If any instalments is missed, no further purchases can be made through the platform. Secondly, the total transaction values are small, typically a maximum of $500. I think this makes APT less likely to incur significant bad debt provisions in a deteriorating credit cycle. Certainly, to date, this has been the experience with APT’s net transaction loss running at around 0.7%.
There is presently a huge discrepancy between Zip and Afterpay's profitability which makes the concept of value somewhat extraneous. In the just released 1H FY18 numbers, Afterpay reported earnings (EBTDA) of $5.5m, Zip reported a loss of $13.1m.
In respect to BPS: I was particularly intrigued by the 16 November announcement by the incumbent board to: "revoke the Dividend ... pending the outcome of its AGM ...". Hardly an effective way to promote ongoing board support I would have thought. And in the same release the board announced the establishment of a share buy-back and yet 6 days later are coming to the market to raise $10m in fresh equity at a 10% discount....!!
Hi Tim, We use both Factset www.factset.com and IRESS www.iress.com/au/ to import the data into our models. These information systems provide an exhaustive amount of data but are also very expensive. Unfortunately I don't know of any data providers that could supply you with that data in a cost effective manner.
Hi Aaron, thanks for your comments. You're exactly right with your views with respect to momentum. Often these momentum trades occur in 'waves' or 'surges' with strong performance periods interspersed with periods of, sometimes quite severe, pullbacks. What we aim to achieve is to have higher weightings during the periods of surges and lighten off during period of retracement. Of course that’s easier said than done, but effectively we never buy into falling prices, we only buy when positive momentum is growing. And we lighten off when positive momentum appears to be easing. Again, never expect that you’ll be able to buy everything at the bottom nor sell everything at the top. You have to be happy to leave something on the table for the next person….!
It's understandable that Australian investors are cynical about the future value of these unproven tech businesses. Unfortunately there have been only a handful of domestic success stories and plenty of disappointments. Indeed if these ASX listed stocks are perceived as undervalued because the ASX market is not "Tech-savvy" then the question must be asked as to why the directors of these companies resolved to list them locally in the first place?
Hi Phil, Thanks for you comments, you're completely correct, the recent declines in sales have been concentrated in WA and QLD and it is very likely that this is primarily a result of the fall-off in the commodity sector. However the counter-argument is that there had previously been an unusually high-level of sales as a result of falling interest rates and a booming mining sector. Of course the car sector is not alone, retailers across the board appear to be struggling this year. But drawing a direct statistical link between car 'turnover' and a decline in sales is impractical, particularly in the short-term. It is simply my opinion, but one I am confident has merit.
I don't see driverless being widely adopted for more than a decade or two (government regulation will be the greatest hurdle for widespread use) but as theme becomes more apparent, investors will start reconsidering their approach and the valuations they apply to these stocks.
Appreciate the transparency and insight in this interview. Great read.
Got down safely thanks Alex...! Quite a view from above Wollongong that day.
Hi Jerome, XPD was floated by BBY (when they were still around). The Enice raise was led by Investorlink and PAC; CDC by Philip Capital and WMC by Beer and Co. Glancing at the registers, these stocks to date do not appear to have attracted much interest from domestic institutional investors.