Why are Australians paying heed to these 3 'Buy now pay later' Stocks- Z1P, APT, SPT?

  • Jun 07, 2019 AEST
  • Team Kalkine
Why are Australians paying heed to these 3 'Buy now pay later' Stocks- Z1P, APT, SPT?

Zip Co Limited, Splitit Payments Ltd, and Afterpay Touch Group Limited are fintech companies.

What are the fintech companies?

Financial technology (popular as Fintech) utilizes technology to drive financial services or aid the organizations to handle the segment related to finance of their respective businesses comprising of new software and applications, processes and so forth.

Fintech is used for automating the insurance, bank services, trading as well as risk management business.

The disruptive forces instrumental in restructuring the Fintech industry includes of as following:

  • Rise in online shopping method.
  • In order to engage customers, the banks are looking towards Fintech as well as large technology companies.
  • Insurance products are also getting personalized to the consumers who demand coverage for specific region, usages as well as timeframes.
  • AI, which plays an important role in distinguishing financial services products.

The updates on three fintech companies are as follows:

Zip Co Limited:

Zip Co Limited (ASX: Z1P) offers its consumers and merchants point-of-sale credit and digital payment services. The company offers a fully cloud-based platform that utilizes its proprietary technology as well as Big Data for enhancing the established fundamentals of promotional finance that is interest-free.

Recently, Zip Co Limited and Kmart Australia Ltd have entered into a partnership with Kmart Australia Ltd (“Kmart”) to provide Zip interest-free payments to the consumers of Kmart.

Kmart Australia Ltd operates a national network of 228 stores across Australia and New Zealand. It provides its customers with daily products at the lowest prices. Kmart is known as one of the most gainful discount department stores in Australia.

Larry Diamond, the CEO and Managing Director of Zip Co Limited, considers that Zip is suitable for Kmart which will provide the customers of Kmart with a improved ways to pay for their everyday stuffs as well as purchases.

Q3 Financial highlights:

    • Z1P reported a rise in its quarterly revenue by 20 percent as compared to the Q2 FY2019 period.
    • Receivables went up by 16% to $565.3 million.
    • The customer numbers increase by 143,000 to 1.2 million during the quarter, which is a growth of 14% on Q2 period.
    • The company signed a wholesale agreement with global payments provider Adyen, under which Zip is enabled as an integrated payment option for all Retailers using the Adyen platform online or instore.

The shares of Z1P have generated an outstanding YTD return of 170%. Zip Co has a market capitalization of A$1.05 billion and around 352.14 million outstanding shares. The stock of the company is currently trading at A$2.990 (as on 7 June 2019, 1:05 AEST), up by 0.673%.

Afterpay Touch Group Limited

Afterpay Touch Group Limited (ASX: APT) is another payments company driven by technology that targets the international consumer base to make their purchasing experience great. APT enables the top retailers to provide service related to ‘buy now, receive now, pay later’. By utilizing this service, the end users do not need to enter in a conventional loan or make a payment of upfront fees or interest to the Afterpay.

At present, the company has ~ 3.5 million active clients as well as more than over 25k active retail merchants on-boarded.

On 6 June 2019, the company provided an update related to key business and regulatory development.

Business highlights and market update:

  • In the 11 months duration to 31 May 2019, the company reported the underlying sales of ~$4.7 billion, which was up by 143% on the prior corresponding period.
  • By the May 2019 end, the company had above 4.3 million active clients who transacted with Afterpay.
  • The company has entered into a partnership with ~30,600 active merchants, up by 32% on 31 December 2018.
  • Afterpay continues to be solid in the US region. In a duration of 1 year, the company was able to acquire more than 1.5 million active customers who can now purchase with more than 3,300 active merchants.
  • Afterpay US underlying sales were ~ $780mn for eleven months.
  • The Merchants who have gone live includes Levi’s, Tarte, Jeffree Star Cosmetics, Windsor, Reformation any many others.
  • The growth in the US market was driven by demand via customer and merchant, supported by Afterpay’s US and global-based expert staff.
  • APT concluded the “soft test” in the United Kingdom market and is live now and carrying out the transaction through the name Clearpay.
  • In the UK, the company launched the same product, business model, a global technology and operating platform, which succeeded in other markets.
  • The company acquired Clearpay and adopted the Clearpay name, which provided flexibility to get to market faster as well as capture the market growth opportunity.
  • More than 2.7 mn active customers in Australia as well as New Zealand who could now do shopping at ~ 27.3k merchants.

The shares of APT is trading at A$24.050, up by 2.559% (as on 7 June 2019, 1:30 PM AEST). Afterpay holds a market cap of A$5.6 billion and around 238.84 million shares outstanding.

Splitit Payments Ltd

Splitit Payments Ltd (ASX: SPT), is another financial technology company that provides credit card based instalment solution to businesses as well as merchants.

Both, e-Commerce as well as brick & mortar merchants, can offer interest-free monthly installment payments to their customers at the point of sale through Splitit. Splitit works on their existing credit cards. As a result, the customers can also enjoy all their regular credit card benefits like cash back, points etc. The Splitit’s solution at present is deployed in twenty-seven countries. The Merchants of the company are from the US, the UK, France, Italy, Australia, as well as Singapore.

On 5 June 2019, the company announced its partnership with EFT pay, under which the HK merchants are provided with installment payment solution to the merchants who are operational in HK as well as Macau. Details can be read by clicking over here.

On 4 June 2019, the company announced the appointment of Brad Paterson, the former Intuit (NASDAQ: INTU, Vice President of Marketing, as the Managing Director, North America. He would be leading the North American processes. He has worked for almost two decades, with some of the most successful payment companies such as Intuit, PayPal as well as Visa.

In FY2018 which ended on 31 December 2018, the company reported a 117% growth in the active merchants as compared to the previous corresponding period. The number of unique shoppers went up by 293% on pcp. The revenue from the continuing operations increased by 203%. The gross profit noted for the period was US$389,793, up by 561% as compared to its previous corresponding period. However, as a result of increased operating expenses, the company incurred a net loss of US$4,642,975. By the end of the FY2018, SPT had net cash and cash equivalent of $309,590.

Outlook for 2019:

  • Accelerate the merchant acquisition strategy.
  • Leverage Partnerships.
  • Invest in further platform innovation.
  • Expand the presence of the company worldwide.
  • Focus on acquiring market share.
  • Continue to win the customer first approach.

The SPT stock price is trading at A$0.760, which was up by 2.013% (as on 7 June 2019). SPT has a market cap of A$228.83 million and approximately 307.16 million outstanding shares.


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