Afterpay Touch Joins The $5 Billion Club (By Market Cap)

Afterpay Touch Group Limited (ASX: APT) provides payment services. The company offers a platform for payment of goods, including apparel, shoes, automotive parts, watches, personal care, sports, arts, food, beverages, and other products. Afterpay Touch Group serves customers in Australia.

In a recent development, one of the directors of the company, Mr. Clifford Rosenberg, who held 800,574 ordinary shares in his indirect capacity and 700,000 and 200,000 unlisted options at an exercise price of $0.20 & $1.00 per option directly, disposed 150,000 shares for a consideration of $2,969,439.97 (before brokerage) as on 1, 4 and 5 March 2019. Hence after this development, Mr. Rosenberg holds 650,574 fully paid ordinary shares in his indirect capacity and 700,000 and 200,000 unlisted options at an exercise price of $0.20 and $1.00, respectively, in a direct capacity.

For the half year ended 31 December 2018, pro forma total income for the group was $116.1 million, up 91% on the prior comparable period which was driven principally by strong growth in income from merchant fees. The group reported a pro forma Earnings before interest tax and depreciation of $17.0 million and also a statutory loss for the period of $22.2 million as the business continued to invest in technology, people and marketing. These expenses were done to scale its operations internationally and in Australia.

The underlying sales were $2.3 Bn for the period, a growth of 147% on the pcp. This material growth in Afterpay underlying sales was driven by more than doubling of active customers and active merchants, as well as increased usage of the Afterpay service by existing customers to pay for their purchases.

Its immediate markets, where the company is present, represents an A$6 trillion opportunity. The online contribution in these three markets is A$780 billion. The company’s success in the Australian region has shown the applicability of its product across the majority of retail categories. The management envisages the great opportunities ahead as it will continue to grow in existing and new verticals in ANZ markets. The management believes that the US opportunity is now clear, and the merchant and customer growth has been beyond expectations for the first six months; also, the pipeline of integrating merchants is significant.

Also, the company looks all set for the UK launch in H2 FY19. Regarding the launch, the technical set up and in-market team development is well on track with retail-based engagement also in progress. The management believes that customer lifetime value is growing and is getting enhanced through platform innovation.

On the stock performance front, the company has posted the YTD return of 94.25%. The company also posted returns of 30.81% & 16.61% over the past six months and one-month period, respectively. At market close on 4th April 2019, the stock of the company traded at a price of A$23.500, with a market capitalisation of ~A$ 5.54 billion. The stock opened the trading day at $23.30, reached the day’s high of $23.65 and touched the day’s low of A$ 23.16, with a daily volume of 1,147,712. It had a 52-week high price of $24.130 and a 52-week low price of $5.260, with an average volume of ~2.2 Mn.


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