Can Australia’s Fintech Companies take Advantage of Fair Winds from Asia?

  • Aug 12, 2019 AEST
  • Team Kalkine
Can Australia’s Fintech Companies take Advantage of Fair Winds from Asia?

Mining, manufacturing and agriculture are important, but they are not the only vitalities of an economy, especially when we talk about a diverse economy like Australia. With the world, transitioning into a tech-savvy environment, Fintech companies (the ones which use technology to enhance/automate the delivery and use of financial services) have emerged victorious in terms of providing innovation, encouraging employment and contributing largely to the GDP.

For a budding economy like Australia, which is technically advanced, financially sane and bears good employment options, Fintech companies have been on a rise since the past few years. The sector is believed to have generated almost ~140 billion in Australia’s GDP, given the firm hold of the financial sector in the country. In our article on Australia’s economy in the past century, we discussed that the banks have remained to be one of the biggest boosts to the country’s growth. Australia’s Big Four Banks are world-class amid the availability of investment funds.

Australia continues to attract financial stakeholders towards its rich pool of fintech investing options in the transparent market, which has a steady regulatory system and low risks. Toppled by the firm legal system and especially the present Royal Commission era, investors and traders prefer to take advantage of the country’s dominance in the sector. The presence of Australia in the Asia-Pacific band is perhaps the biggest factor bearing the fruits of sector. Experts believe that the global economic shift is happening towards countries like Singapore, Japan and Hong Kong, from the US and Europe. And why not? These countries have great economies, multinational companies, sound taxation and regulatory systems, a firm legal scenario and low taxes. As an add on, Australia has the advantage of language, along with the other factors discussed above. Hence, it is safe to state that Australia can maximise its stance in the Fintech sector, if the tax reforms are lucratively designed and prevailing dual listing of companies is unitised.

Given this backdrop, it would be interesting to unveil the updates and stock performances of the 5 Fintech companies, listed and trading on the Australian Securities Exchange:

Praemium Limited (ASX: PPS)

An innovative and tech-savvy manager of investments, PPS provided its financial results for FY19 on 12 August 2019. The company has a 25% increase in platform FUA, to a record $9.5 billion. The total FUA was $16.1 billion, up by a whopping 108% on pcp. The revenue was up by 5% at $45.1 million and the EBITDA was $11.4 million, up by 29%. The NPAT stood at $2.5 million, zooming up by 80% on pcp. Besides, PPS won quite a few awards in the year, few of them are titled- International Platform of the Year and Innovation Award.

PPS Financial Summary (Source: PPS’ Report)

The company administers over 500,000 investor accounts covering over $140 billion in funds worldwide. The year 2019 witnessed a solid progress and was full of growth-initiatives. The upgrade to the Integrated Managed Accounts Platform in February was a major driver in expanding PPS’ addressable markets, with the Australian market expanding to $858 billion from $21 billion. Despite the reduction of interest rates by the RBA, PPS’ netting benefit depicted an average 20% drop in the costs of brokerage for investors.

Kina Securities Limited (ASX: KSL)

A financial services company in PNG, KSL released the results of the AGM or Annual General Meeting on 21 May 2019.

The CEO of the company stated that during the year, KSL’s customer numbers grew by 25% to ~21,000 and the deposits grew by 29% to PGK 1.3 billion, while the loans and advances grew by 20% to PGK 851.7 million. The forex income rose up by 373% to PGK 34.2 million. The NPAT was recorded at ~PGK 48 million. The company successfully acquired ANZ PNG’s Retail, SME and Commercial businesses. Post completion of the project, which is expected in September 2019, KSL would become the second largest retail bank in PNG. In the fintech context, KSL’s automated systems and processes upgraded the company’s efficiency, and provided an e-switching option as well.

On the outlook front, KSL has forecasted a GDP growth rate of 3.2% for 2019.

Moelis Australia Limited (ASX: MOE)

A specialist in asset management, corporate advisory and equities, MOE held its AGM 2019 on May 2 2019. The company completed a decade of operations, and since commencement in 2009, it has built a Corporate Advisory & Equities business steering more than $98 billion of transactions. The Asset Management business that at 31 December had $3.7 billion of AUM. Moreover, the company added ~40 full time employees in FY18. The revenue was recorded at ~$136.2 million, up by 27% on pcp resulting in an EBITDA of ~$57.4 million, which was up by 38%. The NPAT of ~$39.2 million was up by 35%, and the company was able to pay a dividend of 8 cents per share to its stakeholders, up by 14% on pcp.

The Asset Management division grew to contribute EBITDA of $52.5 million, up by 48%. The AUM increased by $800 million in 2018, providing a firm platform to grow the company’s recurring revenue streams. The Revenue in our Corporate Advisory and Equities division was $51.5 million, and the net assets were recorded at ~$241 million. The Moelis Australia Foundation had raised more than $4.8 million in the last two years and was distributing funds to charities.

MOE History (Source: MOE’s Report)

Australian Ethical Investment Limited (ASX: AEF)

A provider of Superannuation, managed funds and pensions, AEF increased its FUM by 9.2% to $3.42 billion for the quarter ending 30 June 2019 9as announced in July 2019). The FUM was up from the $3.13 billion recorded as at 31 March 2019. Over FY18 to 30 June 2019, the FUM was up by 21% to $3.42 billion, up from $2.82 billion as at 30 June 2018. The membership of superannuation was up by ~4% over FY18 to 30 June 2019.

FUM for 3 months to 30 June 2019 (Source: AEF’s Report)

Market experts and investors are awaiting the company’s full year results that will be released in late August 2019. AEF had notified on 4 July 2019 that its UPAT for the 12 months ending 30 June 2019 would range between $6.4 million and $6.6 million, which depicts a mid-point increase of 30% on the 12 months ended 30 June 2018.

Afterpay Touch Group Limited (ASX: APT)

A tech-driven payments company, APT is a leader in the ‘Buy Now, Pay Later’ policy. The company would conduct an Afterpay Day from August 14 to 15. The days would have sales by top fashion and beauty brands and retailers, that offer Afterpay. In the last Afterpay Day sale in March 2019, the business witnessed more than 400 US retail partners take part with an average upsurge in the sales volume of over 110%.

On 2 July 2019, the company notified that it was in the process of transitioning to an independent Board which would consist of an independent Chair. The global hunt to fill in at least two additional independent directors was on. With regards to evolving the composition and independence of its Board, Co-founder, Anthony Eisen was set to assume the role of CEO & Managing Director. Elana Rubin, who was an independent Non-Executive Director, would assume the role of Interim Chair, unless a probable candidate fills in the position. Co-founder, Nick Molnar was all set to assume the role of Global Chief Revenue Officer. David Hancock assumed the role of Group Head and Frerk-Malte (Malte) Feller was appointed as the Global Chief Operating Officer, right after Carl Scheible’s appointment for the UK wing.

Let us now acquaint ourselves to the current trade behaviour of these companies on ASX, after the trading session, on 12 August 2019:

Company Stock Price (A$) Stock Performance (%) YTD Return (%)
Praemium Limited (ASX: PPS) 0.520 Up by 1.961 -22.73
Moelis Australia Limited (ASX: MOE) 3.620 Down by 2.688 -24.70
Australian Ethical Investment Limited (ASX: AEF) 2.130 Up by 1.429 19.32
Afterpay Touch Group Limited (ASX: APT) 23.720 Down by 1.862 101.42
Kina Securities Limited (ASX: KSL) 1.4 Up by 0.358 46.84


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