We will be discussing a few new generation businesses which are dependent on technology. Let’s look at the current updates of these companies along with a glimpse of their financial updates.
Zip Co Limited (ASX: Z1P)
Zip Co Limited is a leading player in the digital retail finance and payments industry. The company offers point-of-sale credit and digital payment services to the retail, education, healthcare and travel industries.
Q1FY20 Financial Highlights for the quarter ended 30 September 2019: Z1P announced its FY20 first-quarter results, wherein the company reported revenue of $31 million, up 107% on y-o-y basis. The company reported robust 55% and 66% year-on-year growth in merchants and customers at 17,890 and 1.41 million, respectively. The business recorded quarterly transaction volume of $402.1m, depicting a growth of 111% compared to the prior corresponding period. The company launched Zip Master Trust in September 2019, which witnessed significant oversubscription resulting in a close of $500 million. During the quarter the company entered into an agreement to acquire global instalment technology platform, PartPay Limited. The above collaboration will provide exposure to four key geographies – New Zealand, United Kingdom, United States and South Africa.
Q1FY20 Result Update (Source: Company reports)
Guidance: As per the management guidance, the company is targeting a customer base of 2.5 million in FY20 while the company is targeting for EOFY 2020 of $2.2 billion in transaction volumes.
Stock Update: The stock of Z1P closed at $3.760 with a market capitalization of $1.39 billion on 22 November 2019. The stock has generated returns of 11.01% and -3.87% in the last three-months and six-months, respectively.
Afterpay Touch Group Limited (ASX: APT) is a global technology-driven payments company. The company has developed digital payment businesses. It serves major consumer-facing companies in the healthcare, telecommunications, and convenience retail sectors in Australia.
Key highlights for 4 months ended 31 October 2019: APT reported underlying sales of $2.7 billion, up 23% on y-o-y basis aided by growth and performance across all geographies and channels. The company reported active customers at 6.1 million, up 137% on the prior corresponding period. Active merchants during the period stood at 39,450, witnessed a 96% jump from previous corresponding period (pcp). On an average, the business admitted greater than 15,000 new customers per day during the month of October 2019. This represents its most successful month based on customer acquisition till date. The rate of customer acquisition accelerated from 12,500 customers in a day in July 2019.
The company reported that customers across Australia and New Zealand, who joined Afterpay during FY15 to FY17 had an approximate purchase rate of approximately 22x per year. The business reported nearly 40,000 active merchants’ platform, almost double on pcp terms, reflecting the onboarding of both higher margin SMB merchants and key new enterprise merchants. During the period, the company made strategic collaboration with Mastercard in Australia and New Zealand which is expected to support its mid-term growth.
Stock Update: The stock of APT closed at $30.490 with a market capitalization of $7.68 billion on 22 November 2019. The stock has generated returns of 26.35% and 23.08% during the last three-months and six-months, respectively.
Magellan Financial Group Limited (ASX: MFG)
Magellan Financial Group Limited operates in funds management arena. It offers international investment funds to retail investors as well as high net worth investors. The company operates across New Zealand and Australia and extends its services globally to institutional investors. Recently, the company reported change in director’s interests wherein, one of its directors Brett Peter Cairns has acquired 1,03,092 ordinary shares at a consideration of $48.50 per share.
The company further informed about the issuance of 123,710 number of Fully Paid Ordinary Shares at a value consideration of $48.50 per share as on 14 November 2019, as part of the share purchase plan for employees.
Funds Under Management Update as on 31 October 2019: As per the company update, MFG reported total FUM of $93,544 million which includes $68,460 million deployed in Global equities, $17,122 million in Infrastructure Equities and $7,962 million in Australian Equities. During the month, MGF witnessed net inflows of $1,385 million, which included net retail inflows of $1,125 million and net institutional inflows of $260 million.
FUM Bifurcation as on 31 October 2019 (Source: Company Reports)
Stock Update: The stock of MFG closed at $49,430, up 2.979% as on 22 November 2019. At current market price, the stock has a market capitalization of ~$8.75 billion along with an annualized dividend yield of 3.86%. The stock is available at a price to earnings multiples of 22.52x. The stock has given mixed returns of -9.99% and 7.67% during the last three-months and six-months, respectively.
Wesfarmers Limited (ASC: WES)
Wesfarmers Limited operates in a diversified industrial segment with interests including retail operations covering home improvement and office supplies, general merchandise and specialty departments stores, gas processing and distribution, chemicals and fertilizers, and industrial and safety. Recently, the company informed about one its director’s named Anthony John Howarth’s final interest of 6,253 fully paid ordinary shares on 14th November 2019, the day when he ceased to be a director of the company.
FY19 Financial Highlights for period ending 30 June 2019: WES reported its full-year financial results, wherein the company reported revenue of $27.9 billion, up 4.3% on y-o-y basis. The company reported net profit after tax at $1.9 billion, higher by 13.5% compared to FY18 on account of continued earnings growth reflecting strong operational performance and customer demand.
During the year the company executed successful demerger of Coles and divestment of Kmart Tyre & Auto and of its interests in Bengalla and Quadrant Energy.
Stock Update: The stock of WES closed at $42.10 with a market capitalization of ~$47.79 billion on 22 November 2019. The stock is available at a price to earnings multiples of 8.65x. At current market price, the stock has a dividend yield of 4.22% on an annualized basis. The stock has generated returns of 8.66% and 14.98% in the last three-months and six-months, respectively.
Coles Group Limited (ASX: COL)
Coles Group Limited is involved in providing customers with everyday products, including groceries, fresh food, liquor, general merchandise, financial services and fuel through its online platforms and store network. Recently, the company concluded its annual general meeting, where James Graham, COL’s Chairman while addressing shareholders stated that the company in its endeavor to provide quality goods at attractive prices to Australian households has grown to become an important part of the Australian landscape. Currently, via 2,400 outlets it encompasses retailing of food, liquor and fuel, complemented by a significant increase of its on-line businesses.
During the year, COL undertook various initiatives including two important technology-based commitments to improve its product competitiveness and offerings. First, it would be building two automated ambient temperature distribution centres in New South Wales and Queensland with the help of world’s leading Witron automation technology from Germany. Second, it would be enhancing its partnership with Ocado which is the world’s pre-eminent online end-to-end supermarket operation based in the United Kingdom. Under the partnership, it would build two new Customer Fulfillment Centres in Sydney and Melbourne and establish a world leading home delivery system and customer website.
1Q FY20 Key Highlights for the quarter ended 29 September 2019: Group first quarter sales revenue for the quarter was reported at $8.7 billion, an increase of 1.8% on previous corresponding period. Supermarkets comparable sales grew by 0.1%, compared to the sales achieved in the previous corresponding period. Strong performance in First Choice led to increase in Liquor comparable sales by 0.7%.
Stock Performance: On stock performance, COL’s share on November 22, 2019 closed at $15.630 down by 0.509%. The stock has delivered returns of 19.67% and 21.51% during the last three months and six-months, respectively. The stock is available at a PE multiples ratio of 14.61x on trailing twelve months basis.
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