- There has been significant growth witnessed in fintech space amid COVID-19 crisis due to rising investor confidence, as a result of surging customers and merchants of such companies.
- Afterpay anticipates lower provisions, as well as lower losses for FY20 compared to previous expectations, while Zip Co has recently launched Zip business by partnering with eBay Australia.
- Ecofibre posted robust NPAT of $13.2 million in FY20 ended 30 June because of robust increase in revenue and margins, as well as solid cost management.
- FlexiGroup posted mixed results for FY20 ended 30 June, tumbling down by 65% in statutory NPAT noted for the period.
COVID-19 has created an environment of uncertainty and volatility for many fintech companies, with issues like accessing funds for start-ups in the early stage because many investors focused on established names among fintechs with a clear business model.
However, as the economy emerges from lockdown and sets in recovery mode, coronavirus can prove beneficial for fintech stocks. There has already been substantial growth in digital financial services and e-commerce platforms as people switched to online mode of shopping and making payments to maintain social distancing rules that have been imposed worldwide.
Let’s have a look at 4 ASX-listed stocks to get familiar with their respective performances.
Afterpay Limited (ASX:APT) share price has skyrocketed by 919.32%, amid hitting the low point of $8.9 on 23 March to $90.72 on 26 August.
As per the trading update dated 19 August, Afterpay believes that its profitability for FY20 will be much higher. Afterpay expects unaudited FY20 Net Transaction Loss (NTL) as a percentage of underlying sales to be about 0.38% compared to 0.55% in its previous update in July.
The improvement came due to higher than anticipated collections of instalment payments relating to the 30 June 2020 receivables balance that took place after 30 June 2020. This implied lower provision and lower losses than anticipated in FY20.
Other expectations of Afterpay for FY20 included of the followings:
- Net Transaction margin (NTM) as a percentage of underlying sales and EBIDTA is likely to be more than the July trading update with NTM% at about 2.25%
- Unaudited provision for anticipated losses is likely to be around $34 million on a gross consumer receivables balance of $817 million on 30 June 2020
- FY20 EBIDTA excluding items is now anticipated to be $44 million
Source: APT update, ASX
This week, Afterpay also declared plans to accelerate its growth through expansion in Europe. Afterpay’s subsidiary company Clearpay entered into an agreement with NBQ Corporate SLU (NBQ) to acquire Pagantis and PMT Technology.
Pagantis is a BNPL and credit provider in Spain, Italy, and France with an addressable market of 150 billion euros.
NBQ will get 50 million euros for Pagantis and other payments if the equity value of Pagantis reaches certain levels and fulfilment of other considerations.
Ecofibre Limited (ASX: EOF) share price has risen 116.8%, between low point of $1.25 on 23 March to $2.71 on 26 August.
In July-end, Ecofibre posted a full-year NPAT of $13.2 million in FY20 for the period 30 June, up from $6 million in FY19 due to robust growth in revenue, rise in gross margins and persistent strong cost management.
Some of the highlights from FY20 results includes of the following:
- 42% rise in revenue from $35.6 million in FY19 to $50.7 million, while operating expenses rose 21% from pcp to $27.5 million
- Underlying EBIDTA margin after adjusting for one-off items in FY19 and FY20 increased from 19% in FY19 to 27% in FY20
- The Company has a robust balance sheet with $18.3 million cash on hand and low debt
- During FY20, Ecofibre also raised $29.5 million from institutional investors to fund the upfront cash component of the acquisition of TexInnovate
The Company has a range of subsidiaries like Ananda Health, a manufacturer in retail pharmaceutical sales channel in the US. During the FY20 period, it signed a deal with CVS Pharmacy, largest retail pharmacy company in the US.
All Ananda hemp products are being prescribed by health practitioners for different conditions and are available under the Special Access Scheme and Authorised Prescriber Scheme within Australia.
Ecofibre also commercialised its new Hemp Black line of clothing in FY20. Hemp Black started manufacturing yoga wear in April 2020 to develop its brand and demonstrate the technology, but with COVID-19 outbreak, the focus shifted to masks and neck gaiters. This resulted in a break-even in FY20.
On 24 August, Ecofibre updated on the acquisition of textile business, TexInnovate, to support the commercialisation of Hemp Black. On completion scheduled, next month on 1 September, Ecofibre would make a payment of US$21 million.
Zip Co Limited
Zip Co Limited (ASX:Z1P) share price has soared by a whopping 721.27%, from a low point of $1.175 on 19 March to $9.65 on 26 August.
Zip launched Zip Business by partnering with eBay Australia, giving 40,000 Australian SME businesses a chance to access working capital via the eBay marketplace.
The BNPL firm also announced that it has agreed for $100 million debt funding facility with US firm Victory Park Capital Advisors, LLC (VPC) to fund the Zip Business receivables. This facility will provide Zip with the flexibility and capacity needed to support its business.
Recently, Zip Co attained a record month and gave an update on its targeted acquisition of QuadPay, Inc. In June, Zip announced that it would purchase remaining shares of QuadPay in a deal worth $403 million, but the it is still due for shareholder approval, which is set for 31 August.
Let’s have a look at the performance of Quadpay during July 2020. The BNPL firm recorded:
- Record monthly transaction volume in excess of US$70 million in July, up 30% on the June average and 600% on July 2019
- Added 133,000 customers in July and surpassed the 2 million customer milestone in August.
- Partnered with multiple Internet Retail 100 merchants including Fanatics and Mercari, indicating the combined online volume of over US$3 billion
FlexiGroup Limited (ASX: FXL) share price has risen 226%, from touching a low point of $0.4 on 23 March to $1.305 on 26 August.
FlexiGroup announced its FY20 results on 26 August, which is a mixed bag and included a massive fall in profit.
Some of the highlights from its FY20 results include:
- 65% drop in Statutory NPAT to $21.4 million compared to $61.7 million in FY19 due to COVID-19
- 2.3 million active customers and 73,000 retail and commercial partners, up by 30% and 13% on prior year
- Transaction volume stood at $2.5 billion, up by 17% on FY19
- Plans to raise equity through a 1 for 3.20 entitlement offer with a total offer size of about $140 million, and total estimated underwritten amount of nearly $115 million
Source: FXL Investor Presentation, ASX
FlexiGroup CEO, Rebecca James stated that the equity raising would allow the Group to strengthen its balance sheet and its brand, including its BNPL service Humm, to grow ahead.