A glance at five Financial Stocks - SZL, NGI, MYS, AEF and MNY

The financial sector is made up of main three sub sector groups. The first one includes the diversified financials group that deals with the capital markets like asset management, diversified financial services, consumer finance and mortgage REITs. The second financial group is the insurance sector, where the companies comprise of life and health, property and casualty, reinsurance and insurance brokers. The third one is the financial institution and the banks like regional and diversified banks, and mortgage finance companies.

There are more than 280 companies in the financial sector domain that are listed on the Australian Securities Exchange. Some of the factors that govern financial stocks are the regulations & policies of the governing body, interest rates, inflation, state of the economy & its outlook etc.

Sezzle Inc. (ASX: SZL)

Witnessed strong growth in sales during Black Friday / Cyber Monday period:

Sezzle Inc. (ASX: SZL) on December 9th, 2019 posted an update on a very strong growth in sales during Black Friday/Cyber Monday period. Generally, this period which is of four days is considered the starting of the holiday shopping season. During this period, Sezzle added more than 36,000 new active customers, compared to the 8,000 new active customers added during this four-days shopping period in 2018, which represents a whopping growth.

Morever, the company reported 402 percent rise in the underlying merchant sales in the four days to US$11.3 million. The company had posted the underlying merchant sales standing at US$157.5 million in the 12 months period until 30 September this year.

However, the use of credit cards for retail purchases have declined as the shoppers were using other forms of payments, which is reflected by the PYMNTS survey of 2000 consumers. According to this survey, the instore utilisation of credit cards by shoppers for payment has fallen from 50.2 percent of shoppers during last year to 49.3 percent this year. Further, shoppers are also using less of cash for the payments as the cash payments have also decreased from 39.3% to 36.3%. The usage of credit cards for online shopping, have also dropped from 66.4 percent of shoppers last year to 54.3 percent this year.

Meanwhile, SZL stock has risen 7.48% in the three months, as on December 10th, 2019. On 11 December 2019, SZL was trading at $2.255, down by 1.957% (at AEST 1:31 PM).

Navigator Global Investments Ltd (ASX: NGI)

AUM is declining on the back of redemption of MAS transitioned assets:

Navigator Global Investments Ltd (ASX: NGI) for fiscal 2020 expects EBITDA to be of approximately $33.5 million, which is in line with the EBITDA of $17.6 million reported in the second half of FY 19.

Moreover, the company’s AUM decreased to $14.2 billion as at 30 June 2019 compared to opening AUM as at 1 July 2018 of $16.7 billion on the back of redemption of MAS transitioned assets. NGI’s AUM stood at $13.5 billion as at 30 September 2019 and projects to end this calendar year with total AUM of approximately $2.1 billion. The average management fee for the FY19 fell to 0.68% per annum from 0.73% per annum in the prior year.

NGI is reducing its headcount and had planned it to reduce to 115 by 30 November 2019 from 139 as at 30 June 2019. The redundancies will result in a reduction to employee expenses (excluding bonuses) to be of approximately $1.2m or 9.7% in the second half of the FY20 as compared to the 1st half and to be approximately $3.5m or 12% for FY20 as compared to FY19.

FY 19 Financial Performance (source: Company’s Report)

Meanwhile, NGI stock has fallen 18.01 in three months as on December 10th, 2019, has a good dividend yield of 9.25% and was trading at a P/E of 11.190x. On 11 December 2019, NGI was trading at $2.65, up by 0.379 percent (at AEST 1:49 PM).

MyState Limited (ASX: MYS)

Intends to launch a new funds management platform:

MyState Limited (ASX: MYS) on 10 December 2019, notified the market that CRCA, an innovation support group, has joined the company as a new consumer. This would further expand the company’s business banking for industry associations.

MYS reported 20.59% increase in the net profit after tax for the second half 2019 compared to first half 2019, though for FY 19, there has been 1.51% decline in net profit to $31 million. The company has witnessed 10.7% rise in the total loan book in FY 19 to $5.038 billion.

FY 19 Financial Performance (source: Company’s Report)

Moreover, the company has started back office automation which will change its operating model & cost profile. MYS intends to launch a new funds management platform. Meanwhile, MYS was trading at a P/E of 13.810x. On 11 December 2019, MYS was trading at $4.78, up by 1.271 percent (at AEST 2:01 PM).

Australian Ethical Investment Limited (ASX: AEF)

Strong growth in Funds Under Management:

Australian Ethical Investment Limited (ASX: AEF) reported a strong growth in Funds Under Management (FUM) rose by 9% to $3.72 billion as at 31 October 2019 compared to $3.42 billion as at 30 June 2019. This increase is on back of strong net flows of $0.17bn and positive investment performance of $0.13bn.

Moreover, for the first half of fiscal 2020, the company expects Underlying Net Profit after Tax (UPAT) to be in the range of $4.2 and $4.6 million, mid-point of which represents an increase of 38.7% on the six months ended 31 December 2018 and 30.7% increase on the six months ended 30 June 2019. This growth will come due to strong growth in Funds Under Management.

AEF stock has risen 79.15% in three months as on December 10th, 2019 and was trading at a high P/E of 62.480x. On 11 December 2019, AEF was trading at a price of $3.670, slipping by 2.91 percent (at AEST 2:13 PM).

Money3 Corporation Limited (ASX: MNY)

Dividend to be minimum 10 cent in FY 20:

Money3 Corporation Limited (ASX: MNY) for FY 19 has reported 25% growth in the revenue, 17.3% increase in the Underlying Earnings Before Interest, Tax, depreciation and amortisation (EBITDA) and 14.2% rise in the underlying NPAT to $24.2m.

During the first quarter 2020, the company went for strategic acquisitions in both Australia and New Zealand for expanding the consumer automotive receivables. For FY 20, the company projects the dividend to be minimum of 10 cents.

Meanwhile, MNY stock has fallen 4.80% in three months as on December 10th, 2019 and was trading at a P/E of 13.400x. On 11 December 2019, MNY was trading at $2.170, down by 0.459 percent (at AEST 2:24 PM).


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