2 ASX 200 listed Tyro and Money3 share prices on Opposite Side of ASX Ladder

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2 ASX 200 listed Tyro and Money3 share prices on Opposite Side of ASX Ladder

 2 ASX 200 listed Tyro and Money3 share prices on Opposite Side of ASX Ladder

Summary

  • COVID-19 has led to tighter lending policies in the automotive finance industry and has put funding challenges for the fintech sector.
  • Tyro Payments declined by 0.938% from its last close, on 19 August. It has 32,176 merchants operating in hospitality, and retail verticals that are amongst the hardest hit sectors caused by lockdown restrictions.
  • Recently, Tyro posted record transaction value and revenue figures for FY20 ended 30 June, but its underlying NPAT result excludes IPO costs incurred last year.
  • Of late, Money3 Corporation has revealed full year report for the period ended 30 June. The Company had delivered a strong loan book growth in the first half, but it reduced substantially in the second half due to strong cash collections, tightened lending and lesser than anticipated new loan origination amid COVID-19.

Earlier this year, the world opted for lockdown, as a preventive measure against the spread of coronavirus, and most auto financing companies in Australia resorted to risk-averse behaviour and implemented strict new loan policies, which ensured that most retailers did not purchase fresh stock for sale unless there was a customer-paid deposit for the vehicle.

The situation has been challenging for many dealers due to Victoria COVID-19 outbreak, and sales figures dropped by above 12% across Australia, as per the Australian Automotive Dealer Association, as updated on 6 August 2020.

On the other hand, the fintech sector came into the spotlight due to the rise in consumption of digital technology, especially amongst millennials amid coronavirus. However, COVID-19 has put many fintech firms under stress due to funding hurdles and the dwindling economy.

ALSO READ: Things You Need to Know About Fintech Financing Model: Majors in Action

Let's have a look at the performance of 2 ASX200 stocks involved in the above-mentioned sectors that have witnessed a fall in their share prices, recently.

Tyro Payments Limited (ASX:TYR)

Tyro Payments is an Australian IT sector company that deals in the purchase of merchant debit, credit, and EFTPOS card acquisition. The Company provides transaction processes and extends payment solutions like loans, bank account and security activities.

Tyro Payments share price decreased by 1.25% to end the trading session at $3.16, on 19 August.

FY20 has been a challenging year for both the Company and its 32k merchants.

Bulk of the merchants of Tyro involved in retail, hospitality and health verticals are currently reeling under the pressure of COVID-19. The Company took actions and initiatives to assist these merchants in the second half of the year.

As a consequence, the Group posted record transaction value and revenue figures for FY20 ended 30 June 2020.

Some of the highlights for FY20 are as follows:

  • Record $20.1 billion in transactions processed by Tyro merchants, up 15%, which drove record payments revenue of $202.8 million, up 10% on pcp
  • EBITDA loss was noted of $4.4 million reducing by 49.2% compared to FY19's $8.6 million loss
  • The Company grew its number of active bank accounts by 53% to 3,600 and achieved a record merchant loan origination of $60.1 million, up 15% on pcp
  • $188.3 million in cash and financial investments available for future growth depicts Tyro’s solid balance sheet
  • More than 31,900 merchants were enabled with Alipay as a payments option; also, Tyro Connect was launched during the period
  • NPS improved to 43 (FY19: 37), showing customer satisfaction and approval of Tyro products

The hospitality vertical posted strong growth of 17.5% in transaction value and 13.1% growth was recorded in retail vertical while Tyro's new services vertical delivered 27.8% transaction value growth.

Tyro also received JobKeeper subsidy of $3.9 million from the Federal government from 1 April 2020 to 30 June 2020.

ALSO READ: JobKeeper Lifting Returns for Investors: A Look at 6 ASX listed Stocks that benefitted

In FY20, merchant service fee (MSF) was impacted by a shift to debit cards that carries a lower MSF and significant reduction in transaction value generated from international cards that generate a higher MSF due to travel restrictions in Australia. MSF of 0.895% was achieved in FY20 period compared to 0.926% in FY19.

Robbie Cooke, Tyro's CEO and Managing Director stated that the business went from the thrilling heights of effectively completing IPO in December in what were turbulent markets to alarming lows triggered by January's cruel mix of catastrophic bushfires and mid-March commencement of COVID-19.

He also added that the overall result of Tyro was robust, considering the COVID-19 challenges in the second half and stated that the Company had a resilient business model.

Money3 Corporation Limited (ASX:MNY)

Money3 Corporation Limited is a company from financials sector, which provides non-banking credit services, and the Company remains centred on the provision of automotive finance for new and used vehicles in Australia and New Zealand. It focuses on providing flexible, secured, and unsecured personal loans to consumers.

Money3 Corporation share price increased by 14.595% to close at $2.12 on 19 August.

Money3 announced its full-year results for the year ended 30 June 2020 and posted a Normalised Net Profit after Tax of $32.3 million, up 14.2% on pcp, in accordance with the earlier guidance. The Group, in addition to regular impairment provisions leading to Statutory NPAT of $24.2 million, included a $10.1 million non-cash economic outlook provision given the growing economic uncertainty from coronavirus.

Some of the highlights from the annual year results are as following:

  • 35.3% rise in revenue to $124 million and 16.4% increase in the gross loan book to $433.8 million
  • 31.1% increase in normalised Group EBIDTA and a 30.1% rise in normalised NPAT to $30.3 million
  • 36.3% rise in cash collections to $277.2 million and $65 million of capital available to fund growth in FY20
  • Gross loan book grew $426.7 million, but growth slowed significantly in the second half due to robust cash collections and lower than expected new loan origination
  • A final dividend of 3 cents per share (cps), which is fully franked was announced totalling to 8 cps for the entire year

On the business front, Melbourne and Auckland operations of the Group witnessed restrictions leading to productivity challenges due to COVID-19. Money3 made one-off investments in laptops and infrastructure combined with government incentives; all initiatives were expensed in FY20 with a $0.8 million expense effect. Further, the Group also tightened the lending criteria and thus, has seen subdued lending volumes in Q4 FY20.

ALSO READ: What's Latest in the Australian Automotive Industry?

The Group remains focussed on growing its market share of the existing and profitable portfolio of receivables in the vehicle finance market. Expanding sales in New Zealand and reducing competition in both countries is expected to contribute to strong organic growth in FY21 with the Group optimistic that loan book development would reach $500 million.

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