Looks like Milford have added bit more in the last few months.
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Looks like Milford have added bit more in the last few months.
"Tyro, probably SMPs major competitor outside the banks, has significant outage issues with its system. The AFR has an article titled "SMEs fume: Tyro outages stretch into second week" and it states it may not be fixed until end of this week."
This may lead to more choosing SMP machines over time.
" the AFR articles state that Tyro has to replace 10,000 machines out of 60,000 they have in operation for 32,000 clients. I would be very surprised that they have that many machines just sitting around but who knows. That is a huge exercise and to replace that many in such a short time is difficult.
- I am not aware of any Tyro competitors other than the banks and SMP but someone else may. If the only competitor is SMP then given what has happen my view is SMP will pick up a lot of additional clients from the affected businesses - how many is unknown but I assume some will go back to the banks.
- even if Tyro has 10,000 machines sitting around it will impact their new business until they obtain new machines; not sure how long it will take for them to order and receive new machines (I assume they will come from overseas). This will mean more new business for SMP for a period .
- impact on brand - banks have outages at times but it is usually for a few hours or at most a day - up to two weeks to significantly impact a business is in a different league and I do expect the impact will be beneficial to SMP for some time (will SMP use it as a marketing ploy and give evidence from their operations in NZ of how good their machines are? who knows)
- I can see a class action against Tyro coming unless Tyro compensates the businesses impacted - either way it will cost Tyro a lot of money. If there is a class action there will likely be adverse brand impact on Tyro
- I doubt this will be the last we see about Tyro's problem in the media
- Tyro shares are down over 4% yesterday and over 8% today
- SMP shares have hardly moved - they are a thinly traded company. I do not expect much movement in SP until SMP comes out with an announcement of financial or other results unless they make a separate announcement on machine/client take up."
Interesting article - Joshuatree
I detected a bit of movement in SPY SP yesterday & couldn't see what was responsible for this until your post
Later today could be interesting on whether interest continues on NZX
Pretty solid update and going from strength to strength esp in AU, bring on the buck on sp..
Ann: GENERAL: SPY: Trading Update Yes nearly a 3 bagger toot suite.The road ahead looks clear.
Nearly 2 bagger here...seems as though Tyro’s troubles are helping this one in Aus.
Cool little podcast by Rask Media. Marty explains the industry and Smartpay very eloquently.
Deep-dive: The payments industry, ft. Smartpay (ASX:SMP) CEO Marty Pomeroy - YouTube
Yeah thanks.Its been on my to do top up list a while .Increased my holdings by 40%..Update on re the 19th,20th I think.
https://hotcopper.com.au/documentemb...2BR077FiGug%3D
Yep,Going gangbusters in Aussie
taken a while for SPY to shake off the Covid jitters and point us to light at end of the tunnel :)
Solid revenue growth. Looking forward to a strong and profitable FY23.
I have enough to start updating my estimates but that doesn't mean i've started lol.
This is a small specy one for me because I enjoy the payment and fintech space but i'll get to it someday before the full year accounts are released
there must be two smartpay threads as there are loads of posts from 6 months to a year ago that aren't here
The 2nd half result was even better!
Full year announcement out. $11.1m EBITDA and NPAT of $3.1m. But the vast majority of that earnt in a clean 2nd half
2H FY22 EBITDA of $7.352m vs 1H $3.744m.
2H FY22 NPAT of $2.679m vs $0.4m in the first half
The business is rapidly scaling and absolutely hoovering marketshare in Australia, exploiting Tyro's weakness. Good result given the lockdowns across both NZ and AU over the financial year. With unit roll outs continuing at pace and revenues locked in from those and no further lockdowns FY23 should show a substantial step-up it profitability on the year just been, and FY24 on that.
Nice to see the benefits of scaling and long may it continue. I look forward to its earnings (and SP) in 3 years.
My two cents only...DYOR.
I've recently bought in - solid result, with good growth potential. Good to also hear that March 2022 was a record month.
Very pleasing result. FY23 should be a cracker.
Feeling positive about this business. Been buying since last year after I saw more and more Smartpay machines in takeaways and retail shops.
Another ripper of an update. Pretty happy to hold this one for a while :-).
So they will do $75m-$80m revenue. what sort of profit will that be? $9-$10 mill?
Yes indeed.
Word that keeps spring to mind "flywheel".
Jeez, a bit of gravy chain - they want to increase Directors fees by $300,000 to $500,000
It is quite the increase. Somewhat deserved considering the changing fortunes of the company.
AGM tomorrow. It would be nice to get some guidance for FY23 or at least 1H.
I’m predicting FY23 Sales of ~$72M and EBITDA of ~ $23M. Closing cash in excess of $10M.
Key assumptions:
- 1200 terminals added each quarter
- Acquiring revenue of $1200 per quarter per terminal
- Acquiring margin ~ 52%
- Operating expenses (excluding acquiring COS) increases by 10%
Good headline numbers from SPY:
https://www.nzx.com/announcements/397652
Onwards and upwards. Good to see a material increase in the NPS score also
Yeah I sat in. All in all it was very positive.
Continue executing the strategy was the key message. Rightly so.
No plans to sell NZ ops or become an acquirer here. Androids terminals to be released before end of the financial year.
No guidance but I guess we will have 1H trading update in 6 weeks.
Thanks CoOp,happy holder here.
Q2 revenue growth was a banga
http://nzx-prod-s7fsd7f98s.s3-websit...718/381388.pdf
Looking forward to seeing the half year accounts and the effects of operational leverage has on its earnings. Should be a cracker
That is a stunning update. They have real momentum now.
Also wondering whether the increasing float (merchant funds) and increasing interest rates whether interest revenue will become material.
Really looking forward to the 1H accounts.
Big volumes going through at rising share prices.
Looks like something is about to pop?
Have bought a few at 79c to go for the ride.
Did you notice the crossing yesterday on the asx? :)
Half year report later this month.
More interest in the stock from existing shareholders as they get around to digesting the Q2 quarterly update (not on the top of anyones priority list so a bit of a lag).
Also one of smartpay’s main competitors - Tyro - has received a takeover offer from westpac. Piqued a bit more interest
I bought in a few months ago when the moose from the fiordland started making loud bellows
Cheers FM!
TBH I'm new to the party I only starting accumulating this year. I bought an utterly insignificant parcel years ago which, if I hadn't, I dont think I'd have taken any notice of what Smartpay have been doing the last few years (I often do that just so I will take some notice of a company). It's been listed forever, its changed lots and people lost track of what it was, and until maybe ~4 years ago was just a roll up of some of the Provenco Cadmus assets bought out of receiverships. Was effectively a captive NZ business leasing EFTPOS machine with lots of debt used to fund some of the acquisitions, together with some weird convertible note causing havoc in the financial accounts. Pretty easy to miss right?
But to their credit they've rejuvenated the company. Raised capital and reduced debt, the convertible note is gone and don't have to suffer the brain damage of trying to understand what that was, smartly invested to develop the capability to move from being an eftpos leasing provider to an Australian transactional acquiring provider (where the economics are outstanding), got a new managing director cut from private company cloth who is highly focused on profitability and unit economics, found their differentiated niche in the Australian market and magnificently executed on their gameplan without plunging the company into losses to fund growth. Now profitable and cashflow generative and has been scaling. Oh yeah - has got $27m of off balance tax losses available to offset future tax.
Still lots I am trying to get my head around. Mainly on the industry and competitive situation. Never saw myself getting interested into a terminal business. Pleasing to see the board and management with rather chunky shareholdings and for a historically small and speccy company have got some great institutional investors who have been building their shareholding (Milford and Microcap equities)
Best guess for 1H FY23 (which moves around by the hour) is revenue $35.4m, EBITDA ~$9m (up ~150% on prior year) , and NPAT of ~$3m (up ~640% on PCP). That's the thesis - maybe buy a bit more if I'm right or close enough to it
....................
1.9 million shares crossed on the ASX today at AUD 0.77 (NZD 84c). Rolling 20 business day volumes now the highest since July 2021. At some point would expect to see some SSH notices filed. Will be interesting if a new investor coming on board (and who have they been buying from) or if Milford or Microequities are trading amongst themselves. Very good price discovery at these heavy volumes rather than the day to day movement in small trades.
Disc...have acquired a meaningful position over the last 6 months.
Actually, 2.9m shares crossed at A77c!
Going higher and higher on good volumes, albeit via crossings.
Most likely to be institutional investor(s) getting set and as I was told by Australian fund managers in years past, they do not mind paying up when they evaluate a stock as having 100% upside over a 3 to 5 years’ time frame.
Sorry 2.9m - tad dyslexic - lets hope that doesn't happen when I wind up placing a bid!
Per my theory we've now had today a SSH from MA Financial Group (the recently rebranded Moelis Australia) who I had previously omitted as a major shareholder, as selling down a few million shares. They sold to someone, and they sold to someone large. If in a few days another SSH doesn't occur from either Milford or Microcap Equitiies that implies a new shareholder/acquirer is on the hunt, whether they wind up eventually breaching 5% or hover just below. Decent retail volumes in recent days following block trades.
Interesting to read today that Shaw & Partners said dual listed Smartpay was their highest conviction stock under coverage despite the run up in share price. Glad that I didn't wait to start buying before that little excerpt - I'm up about 35-40% on the smartpay shares I purchased this year in a down market.
Another special crossing today and good retail volumes (both on the asx where the action is).
Moved this from my specy portfolio to my core holdings and a long term holder.
880,000 crossed at A0.84c or NZ0.92c.
Looking better by the day indeed!
Is SPY the ultimate inflation hedge? Just clip the ticket of ever increasing prices
Taking into account higher interest rates and slower consumer demand?
Hit 0.95 today, hopefully breaching the $1 mark is only a matter of (short) time :)
aye I think its just momentum players catching up to trading going on amongst the institutional holders.
w/ tyro catching its second bid it does raise the question of M&A activity (from westpac, previously from potentia private equity). It was in 2019/2020 that SPY agreed to a bid to sell its NZ business for $70m before covid hit - verifone used comcom delays to back out and resubmit a lower bid which was rejected. But I really don't see that as a driver to the institutional trading, just the very good quarterly update where all pistons were on fire and building expectations for how that translates into the 1H financial result.
for a smallcap (even by NZ standards) smartpay has a great institutional shareholder base. Milford, Microequities asset mgmt, anacacia, ma financial (moelis) all as substantial holders, plus another clutch of insto's below the magic 5% (eg ACC, regal, jencay etc), a number high net wealths and self managed super funds, plus chunky holdings by mgmt and the board. The company has been well regarded for its proactive outreach to the aussie investment community.
given the inherent technology risk in the payments sector I reckon the insto's investment gameplan is a takeover at some point to a large trade player. I think it would be of interest to private equity (pretty sure it's already been looked at) but not sure they could get up to a value that reflects its growth potential and satisfies the instos who'd probably prefer to wait 5 years. I haven't looked at their weighted average entry prices but the big 4 pretty call the shots and the top 20 shareholders own 80% of the shares.
ideal speculation. the M&A aspect isn't part of my investment thesis though I don't mind having it on the horizon
Great interim results - excellent growth on all fronts.
Some serious momentum building up with this company - looks like all pistons firing.
http://nzx-prod-s7fsd7f98s.s3-websit...119/384469.pdf
gosh they read well.
probably see a whole new swath of investing want on board this train now that they are generating EPS. some simply wont invest until the company is profitable
buyers on the asx market depth at 91 cents. applies nzx 98 cents :t_up:
IKE and SPY now the new STr great race to $2
STU and MHJ stuck in neutral
I got a few bob each way :t_up::t_up::t_up::t_up:
SPY a double bagger plus.Holding on for the ride:)
its up 37% in the last 2 weeks :t_up:
Nice result and in line with what I expected. My revenue was identical to forecast, EBITDA (per their reporting regime) about 900k too high but my NPAT came in bang in line with actual. With something growing this fast every new set of financials helps to shed some light on where and at what level investment is being made. It looks sensible to me. Nice to see another 5% added to EBITDA margins. Good net cash generation.
Not as good as you Joshuatree only up a smidge under 50% but I'll take it, especially after moving this out of my higher risk / lower conviction NZX portfolio allocation (~15% total NZX holdings) to a core allocation this year (together with with BGP, CEN, EBO, FRE, GNE, HGH, MFT, SCL, SKL, SPK, SUM, and TRA, representing the balance). FWIW anything in the payments sector I reckon is inherently higher risk, but after doing the work was content with the growth/risk adjusted balance.
Disc. Decided not to pick up any more shares this AM - the market (eventually) clocked on too early after the 2Q KPI update (including myself where I added immediately post update). I'll be keenly watching the quarterly run rates from here and the SP in between updates. An investor in this (and all shares), not a trader.
There she pops …. :eek2:
pop
Marty - CEO - gave an interview this AM w/ Coffee Microcaps over in OZ - got quite a bullish impression on the aussie transactional terminals being deployed. Big trades over on the ASX +1m shares.
https://www.nzx.com/announcements/403483
Milford buying more. Added another 3.5m+ shares to the stash.
Aye Milford have a lot of conviction on the stock - they have been buying from MA Financial.
One of the other major institutional holders, Microequities (whose founder is on Smartpay's board), had this to say post result:
“EFTPOS payments business Smartpay Holdings (ASX:SMP) reported 1H23 results with revenue growth of 68% to $35.4m and EBITDA growth of 116% to $8.1m. All metrics such as new terminal additions, revenue per terminal and gross margins are all outperforming expectations. Marketing spend has been stepped up and in the most recent quarter Smartpay showed accelerating new terminal additions. We remain long term supportive shareholders and believe the business can scale to many multiples”
Yesterday's presentation from Smartpay's CEO below. He has a strong handle on the financials and unit economics which is great.
https://www.youtube.com/watch?v=5_fbqjzxbxI
Just looked into these last week (while stuck home with covid) and I like what I see.
Seems to be particularly illiquid on NZX... wondering whether to just buy on ASX albeit a bit less advantageous for Kiwis. Any suggestions? Have you guys managed to buy them on NZX OK?
Almost $1 for $1, but nz has very little on offer. Interesting stock this and one of my 5 choices to do really well in 2023
Fiordland Moose has a better feel for SPY than I have so he may be able to comment much much better.
I note that consensus forecasts have been upgraded for F24 and F25 since the excellent interim results reported in Nov 2022 confirmed that SPY is on a high growth trajectory.
I must be frank and say that I would be contented after investing at 76c to see $1.00 (31% gain) by March 2023 so if it gets to $1.50 by end of 2023, I would be very happy.
I remember when these first ran on the very first announcement a few years ago - 30c up to 85c I think it was,
when first signs became evident of Oz and later the cancelled sale of the NZ Operations.
We have had Covid inbetween and now Aussie progress is well and truly happening
A bit cheaper on ASX than NZX at the moment - 3c AU cheaper + Au/NZD exchange :)
Guess the Aussies are still sleeping around the BBQ & haven't caught on just yet ? :)
https://hotcopper.com.au/asx/smp/
Just look at that - NZX close @ $1.225 today
Meanwhile ASX close today @ Au $1.12
The cobbers over the way must be away on an extended siesta ;)
I sorta feel short term where she goes no-one knows (ain't that the case BlackPeter). I'm loathe to suggest any price targets or advice but I've got a few perspectives you could consider as part of doing your own research.
Most if not all the run up in price from c.90c has been done by retail. There was significant trading and net accumulation by institutions that lifted the SP from c.65c to 90c after the Q2 trading update and subsequent 1H FY23 results, and retail took it from there. Institutions own a large percentage of smartpay so it was more akin to one large holder accumulating, another not yet a SSH accumulating (speculation), and one taking a wee bit of money off the table. I think these sort of reshuffles occur after results and they go into hibernation, with particularly large breaks in December and January - so thats not to say they won't be back.
I regard large bid ups by retail as more speculative and volatile. The share has run hard - up nearly 2x from its ~65c bottom in 2022, so wouldn't be surprised to see the odd profit taking which can reverse the trend.
Thats my very short term perspective.
Institutions and investors will be quite focused on quarterly trading updates and the full year result to 31 March. Given the share price has run hard and has embedded growth expectations, any little stumble could alarm investors and traders, and reinforce disciplined trading amongst institutions. Ultimately at these quarterly intervals I see retail money following the strong price signals set by the large block trades to the extent they occur. Its possible net terminal deployments in Australia could prove to be inconsistent - one really strong quarter, followed by a breather from the company, followed by a catch-up in the following period - it may not prove to be a smooth intra year growth pattern even if the annual growth looks consistent. So if I were a trader (I'm not) I'd have my eye on that.
I only give regard to these catalysts for short term price volatility for buying opportunities, and out of plain old interest. I have a much longer investment horizon assuming my investment thesis plays out.
Longer term its my view that the company will be a meaningfully more valuable one in the future (say 5 years) than it is today, and am more confident about longer term price trends than shorter term trends. I'm slightly more bullish on FY23 than consensus, less so in FY24-25 (as for my own purposes I bake in a meaningful reduction in the # of transaction volumes per terminal on account of a deterioration in the economy, together with some mix changes in customers resulting in a slight compression in average ticket size), but still resulting in strong earnings growth in those periods, and particularly thereafter. I won't bore you with my assumptions and I'd encourage you to come up with your own estimates, but I reckon the company has a better than not chance of generating in FY27 reported EBITDA of ~$58m , EBIT of $39m, and NPAT of ~36m (slightly artificially high as it could be the last period where it is able to utilise some of its tax losses). Reckon it could have between $50-60m of net unrestricted cash and have paid dividends along the way starting in FY25. I believe it would still have good growth ahead but the marketshare land grab would only have a few years left so realistic, reasonable and prudent multiples to capitise those earnings by could be warranted, and discount that back to a present value based on your own required returns for a business of this nature (high growth assumes reasonably aggressive assumptions which I believe should be compensate by higher returns and discount rate, together with inherent long term risk in the payment industry). Happy to talk more about that or via PM if you were keen to share notes. Those future reported EBITDA and EBIT figures are IFRS 16 (so deduct say ~1.2m for leases and grow how you see fit) and don't include share issue expenses, so you could deduct another say 1.5m and grow, and capitalise those adjusted figures, as that's how i look at it. NPAT more or less comes out the same and needs no adjustment.
That's how I look at it, and my thoughts evolve as any investors should.
I'm stoked more with the performance of the company than my paper gains, but I'll take them gains no matter how fleeting they may be on a daily basis. But at the end of the day I remind myself that run rates are intoxicating when they are on the way up, and sobering on the way down.
Thanks FM for your quality post. Gosh we are so lucky that you share your thinking with such detail.
I’m currently up 70% and only discovered this after your started ringing the alarm bells on sharetrader.