Trading Update
https://www.nzx.com/announcements/405514
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Trading Update
https://www.nzx.com/announcements/405514
Growth still looking good.
I always like reading the management outlook commentary:
Q1 Outlook was:
With acceleration in our Australian customer acquisition and improvement in New Zealand trading conditions, Q1 FY23 has further improved from the growth momentum delivered in FY22. As we scale further into our Australian opportunity, and ultimately increase the breadth of awareness of our unique Australian customer proposition, it is clear our solution is resonating strongly with our target market.
Q2 Outlook was:
Accelerated growth momentum continues, setting the foundation for a strong second half to FY23 With further acceleration in customer acquisition resulting in improvement in our key metrics in quarter two FY23, we are seeing an immediate return on our increased investment in marketing and sales. This strong start to FY23 sets a a solid foundation for the remainder of the financial year.
Q3 Outlook today is:
With acceleration in customer acquisition continuing and an ongoing measured approach to investment in growth, we look towards a strong finish to the 2023 financial year.
Nice update. In past years the Q3 terminal adds have been subdued so nice to see continued strong growth this year. FX being a drag is a bit of a bummer.
Aussies ruined the rally
She got legs again :)
$1.30 AU currently
Another strong day for SPY.
People having to pay up as sellers are few and far between.
Still looks undervalued imo considering their rapid revenue growth. You look at some of the multiples that these loss making entities like Serko trade at… smartpay has a long way to run.
Could hit the $1.75-$2 range if the next update is solid and all signs are pointing to another strong update given their outlook commentary on Q3
Disc. Happy holder
Well done holders,a fantastic run.
Exit .. up up and flew away .. all good things only rise a certain amount .. before ..
A nice ride .. thanks boys & girls :)
will be watching to see if there is another chance for some more fly up up and .. another day
NZTX you got off the rocket ship too early...
Not sure you will get another chance :scared:
Hey come on .. I book the credit for finding the untouched good fruit and already share
a fair few of the clues :)
Quite a chunky $4.3m off market trade today on the NZX. First time I've seen a crossing that wasn't on the asx.
Announcement released showing Smartpay added to the S&P ASX All Ordinary index, effective 20 March.
SPY share price in NZ $1.28
SMP,share price in Aussie .S1.10.
Currency au$1.00 concerts to NZ $1,20
Cheaper buying in Aussie by about 6.25%
I wonder why.?
* responded to wrong quote
https://www.marketscreener.com/quote...87383/company/
Look under shareholders
About 2.75 million shares traded today across the NZX & ASX, with bulk of that coming from two off market trades for about NZ$3.3m.
Suspect in anticipation of the Q4 trading update which should be in hand by next Thursday or Friday.
Looking forward to that.
I hope so.
My Q4 guesses:
* AU acquiring revenue of ~NZ$17.4m, up 82% year on year
* Other revenue (mainly NZ terminal leases & misc. other bits and bobs) of 4.4m, up about 2.3%
* Consolidated revenue of $21.7m, up 57.5% year on year
* Brings full year revenue to $78.3m, up 63%
* Precision in the end numbers not the goal - its direction and magnitude of the rate of change in the individual components that matters
We don't usually get any detail on profitability at the quarterly updates (only at half and full year) so will have to wait a while yet to get the full year result. Picking the expenses more difficult in my view than the revenue.
But as it stands I'm a tad above consensus for NPAT for the 12 months just been, and and about ~12% above consensus for the now current year FY24, and 11% above FY25 consensus.
disc: happy holder.
Wilson Asset Management been on the buyside of recent block trades (probably acquiring most from MA Financial as they rebalance) and buying on market. Started buying in December, now own 5.8% of sharecap, supplementing the already very good institutional coverage (for a smallcap).
http://nzx-prod-s7fsd7f98s.s3-websit...078/392769.pdf
Looking forward to the trading update - must be close.
Holder since sub 20c, so very happy :-)
Will let this one continue to run.
Trading update - reads well, upward trajectory continues
https://www.nzx.com/announcements/410443
Yes. Fantastic to have a full year complete - clean - without lockdowns etc. Now we have a pretty clear picture of what this business is able to achieve and the seasonality pattersn.
I have no idea what the Strategic Update and the non binding letter of intent re the NZ fleet is. "Provides a path to present our next generation android terminal and acquiring solution to our loyal NZ customers."
I didn't think the acquiring solution was practical in NZ given the structural differences in the OZ and NZ market.
Well the Australians like it - up 5% straight out of the gate to A$1.35 (equates to 1.46 kiwi at spot) - over A$500k traded already.
Something about that Strategic Update to unlock the value of the NZ fleet got people interested. And another quarter of fantastic growth.
NZ$6.1m turnover on the ASX. Lets not forget add the $21k to that trading on the NZX (lol, sigh)
Looks like the biggest daily volume for at least 2 years.
Often some price differentials between the two, even adjusting for fx. Most of my shares on the ASX but I did last year pick up quite a few tranches on the NZX when it was cheaper to do so. Liquidity better on the ASX so if one was to ever sell could transfer holding to that exchange.
Balance SPY hit your magic number of +NZ$1.50 on the ASX yesterday, opening looks highly encouraging as well.
This MA FINANCIAL GROUP probably just taking some profits
Mind you they’ve sold down a couple of times last year
http://nzx-prod-s7fsd7f98s.s3-websit...672/393451.pdf
Wilsons Asset Management have emerged as a new substantial holder this month (disclosing initial SSH 17 April) with much of it through block trades as well as on market purchases. Those blocks coming from MA Financial (the old Moelis).
My best performing stock has now passed $1.60 (NZX), $1.55 (ASX).....YAY - Counters some of my losses with other stocks :)
Outstanding performance by SPY! Shaping up to be stock of the year! :t_up::t_up:
Great stock, but at what stage does it become overvalued?
Well done holders. I sold this too early and HLG too early and now I'm sitting here like a potato watching everyone else having fun :eek:
It's a fair question to ask of anything that has run this hard so fast.
Around announcements Smartpay's SP action has looked like taking an elevator up followed by taking an escalator down in between announcements, although since October last year there has been higher highs and higher lows each time. Wouldn't be surprised to see that continue and with some profit taking. Pleasingly much of the buyside is now coming through institutions.
I don't particularly concern myself with the daily SP movements as I finished building my position last year and have conviction in where I see this business trading in 4-5 years, based on my assessment of where I see earnings and an appropriate multiple for the business at that time. How the business actually performs is what I watch.
None the less...Smartpay has just started the 2rd month to its now current year 2024 financial year. Consensus NPAT for FY24 is $13.3m and $20.9m for FY25...post today's run up that puts it on a current year PE of 29.4 and FY25 of 18.7. These are high multiples to be sure and reflect the company has to continue to grow to justify its SP, and also some of the fantastic underlying economics of its business. My own NPAT estimates are actually higher than consensus and the company is one of the few where brokers have been continuously upgrading their estimates QoQ.
With the SP where it is the business has to demonstrate growth in scale and profitability and its possible the market gets ahead of itself from time to time (where it has the potential to both be worth quite a bit more in the future than it is now but still be a tad over valued in the short term)
SPY's largest non bank competitor is Tyro, which is itself in talks with private equity to be taken over. It's current SP reflect silly PE multiples (315x FY24 and 78x FY25), and EV/EBITDA multiples of 17.8x and 14.3x those same years, again higher than smartpays. Smartpay is actually larger than Tyro at the EBIT and NPAT level, and growing much faster, but is smaller in terms of terminal deployments and revenue, and by mcap.
As an aside, SPY grew its AU acquiring terminal base by ~6k, ending at 15.7k, with average terminals during the year of 12.6k. Even if it didn't deploy any further terminals in FY24 (exceptionally unlikely and undesirable), I estimate it would still grow its FY24 acquiring revenue by 20-25% and its consolidated revenue by 15-20%, on the back of full year contributions from the acquiring fleet put in place through out the year in the year just finished.
The other cool thing is SPY's business model. It is pro-inflation, as its Australian acquiring business effectively clips the ticket on transactions, so as inflation rises, so to does Smartpay's revenue. But its Australian unit cogs actually go down as it grows. The deal Smartpay struck with its switching provider (Cuscal - and the largest direct cost for the business) is tiered, as as Smartpay processes more total transaction value (a function of # of terminals, # of transactions per terminal, and average ticket size), it gets charged less as a % of TTV. SPY is bringing in more TTV thanks to more terminals, a growing but plateauing# of transactions per terminal (and I'd imagine compresses in FY24 or FY25), but also the impact of inflation on purchases. The more TTV, the lower the switching cost per TTV, and as a % of revenue.
So inflation grows topline, lowers direct unit costs, grows gross profit dollars earnt, and expands % gross profit margins.
Pretty cool eh. A rare feature.
Then there is this whole strategic review and non binding heads of terms just announced with Cuscal to bring the acquiring solution to NZ. It's a bit cryptic, sounds like a big project that could take years, but very intriguing and potentially very significant. NZ has ~30,500 terminals - all on boring leases with no transaction acquiring services provided. But that's for a different post.
Plus, SPY has takeover appeal.
Fiordland Moose - Thank you for such a detailed, valuable insights.
Is it too late to buy SPY now ?
I have some but would like to add more ..not sure if it's too late though as SP is at it's all time high now.
Can't help you there Zulu...only you can make that call ...important to do your own research and come to your own view.
There's a really key catalyst coming at the end of the month (up or down)....the full year FY23 results! Revenue growth is great but still got to see the cost and profit side of things. I'm sort of amazed the SP has shot up so much based on only the revenue picture to be honest. It'll be interesting to see the full year financials and how the cost base is travelling, and understand the implications of that for future years. We only have an incomplete view on how the company tracked in FY23.
There are 3 analysts covering it: Shaw, Blue Ocean Equities, and CCZ - all out of Australia - you could try to get your hands on some of their research.
Media market close report
Eftpos provider Smartpay Holdings reached a 20-year high after rising 6c or 3.66% to $1.70. It reached $1.60 on March 1, 2003.
Well done current holders
Note from one fundy to clients post trading update:
"SMP, a leading independent EFTPOS provider to small to medium enterprises (SMEs) in Australia (AU) and New Zealand (NZ), announced plans to establish transaction acquiring operations in NZ. SMP has come full-circle, having launched an acquiring business in AU in late 2017, funded in part by the original NZ business. In NZ, SMP has long provided payment terminals under a rental model, managing a network of over 30,000 terminals, representing 25% market share.
Provided interchange charges are constrained, transaction acquiring can be far more profitable than simply renting terminals. The AU (acquiring) division currently generates four times the NZ (rental) division’s revenue from half the number of payment terminals, and is now SMP’s core earnings driver.
Changes to NZ retail payments regulations that came into effect in effect late in 2022 capped previously exorbitant interchange fees that had prevailed in NZ. The framework in NZ is now similar to what exists in AU. The new regulations mean non-bank acquirers like SMP can profitably enter the NZ market. A 2023 pilot is in the works, so it is only early days, but the potential is significant."
Video note from Milford on SMP from February
https://milfordasset.com/insights/stock-story-smartpay
Did this a week ago but too busy during the days to post much anymore.
An indicative BOE analysis on the impact of transitioning the NZ fleet from rentals to transaction acquiring.
AU margin per terminal (all NZD)
- FY23 Australian acquiring revenue: $60.5m (actual)
- Ave terminals throughout the year: 12.6k
- Revenue per terminal: $4,800
- Acquiring GP margin: 55 to 60% (lets call it 55%)
- Gross profit per terminal: ~$2,600
NZ margin per terminal (all NZD)
- FY23 NZ service income (rentals): $13.7m (my estimate)
- Ave terminals: 30,500
- Revenue per terminal: ~$450
- Rental GP margin: 85 to 90% (lets call it 90%)
- Gross profit per terminal: $400
Face value differential: $2,200 multiple that by the number of NZ terminal fleet (30,500) and you get an obscenely large uplift in incremental gross profit ($67.1m - yikes!)
Of course that may prove to be an implausible outcome....lower purchasing power NZ (ttv per terminal) together with the structure of the payments industry could mean margins might be structurally lower in NZ. And not all the NZ fleet maybe suitable for Smartpay's acquiring product. So in the absence of more detailed understanding, I calculate the likely maximum size of the prize based on like for like KPIs, and then run some downside / sensitivity scenarios.
Sensitivity analysis
- Assume a 50% discount to to the margin differential per terminal: $1,100
- Assume 50% of the NZ fleet is suitable
- Incremental GP uplift: $16.8m
- Or - assume 25% of the NZ fleet is suitable: $8.4m (half the above)
Those are very indicative and just to get a feel for the potential range of outcomes. The other thing to consider would be what the additional TTV pulled through from converting the NZ rental fleet to transaction acquiring would do to the switching fees paid to Cuscal. As SMP brings in more TTV it achieves lower switching fees. This has the potential to add a huge sum of TTV so its possible SMP's AU switching fees could fall further depending on how the letter of intent with Cuscal is structured. It's possible it is ringfenced to NZ with fees starting high and falling as as TTV grows as is the agreement in Australia.
Then incremental ongoing overheads, marketing and project costs, which ought to be relatively small given the customer base is already in place and captive. And of course the phasing of costs and eventual revenue.
Or it could all prove too hard and not come to anything.
Either way - exciting times as an existing holder. Flicking some of the existing NZ terminal fleet from rentals to an acquiring provider solution has the potential to make a material step change in SPY's profitability over the next few years.
2,500,000 share just exchanged hands. That's a good sign of a big investor
Cuscal (SMP switching provider) appointed BOFA as lead manager and doing non deal roadshows across OZ.
AFR claims IPO could value business up to A$500mn.
Had 30 June 2022 NPAT of $23.4m.
https://www.afr.com/street-talk/paym...0230514-p5d88i
Hot sector.
The numbers certainly point to an incredible opportunity.
I'm just wondering, if switching to the Australian model is such a win-win for the company and retailers, and they simply need to 'upgrade' existing customers, why are SPY only now looking to promote it here?
Why is there nothing prominent on their website about it?
What is the key selling point from the NZ retailers point of view? How much better off will they be?
I'd love to see some calculations from the retailer's point of view...
whoo hoo a bit better than I was expecting
https://www.nzx.com/announcements/412159
High of $1.75 on the NZX, will be interesting to see reaction on the ASX when it opens shortly
Profit Jaws starting to open up.Think,like a Hippos.
How would this affect Smartpay?
https://businessdesk.co.nz/sponsored...pos-taking-off
Good to see another institution, WAM on the share register👍
Not the sort of announcement I like to see. Directors are under the gun to make prompt disclosures so hopefully this is that and not something bigger. Latitude had quite a serious breach and will be of consequence to that business, although SPY doesnt collect anywhere near the same amount of customer info (HMY would be a prime comparable to Latitude in terms of breach potential). Fingers crossed.
http://nzx-prod-s7fsd7f98s.s3-websit...215/396658.pdf
Marty will be speaking in Auckland at the NZSA event this coming Wednesday evening. Non-members welcome. $5 on the door.
Details here:
Auckland Branch Meeting: Arie Dekker, Head of Research, Jarden & 2nd speaker Marty Pomeroy CEO Smartpay Holdings Ltd (nzshareholders.co.nz)
https://www.nzx.com/announcements/413336
Am i reading this right? Milford sold 2.5m shares from Dec to Jun during which time the price went from $1.00 to $1.80.. ? How high would it have gone if they hadn’t sold..? Still holding 30 million more..
Thank you Noodles for letting us know about this upcoming NZ Shareholders Association event.
Although I am a member I had overlooked this information.
The NZSA performs a valuable role in monitoring & keeping company behaviour in check.
Anyone with a significant share portfolio should think seriously about becoming a member.
Would highly appreciate anyone attending to provide some crib notes on the presentation
I do reckon while the growth prospects for smartpay are very strong, and it’ll continue to grow too and bottom line well, holders need to reign in their expectations. Aussie retail is getting hit hard and 2024 will be even harder. Some of that will be felt in the # of transactions per terminal, and some via churn. I cant help but feel growth in net terminals maxed in FY23, but fy24 will still be robust, with full year contributions from terminals added last year, as well as its pro inflation business model contributing. Id be tempted to take risk off the table but the NZ acquiring growth angle keeps me interested as a semi free option.
Thank you for your observations Moose - they are always thought provoking.
Unfortunately Martyn Pomeroy was unable to attend last night's meeting - probably on account of the cyber attack on Smartpay's systems.
The CFO of Aroa Biotech James Agnew took his place.
Some big percentage growth numbers in 1st Quarter
Looks really good
http://nzx-prod-s7fsd7f98s.s3-websit...369/399231.pdf
Do those numbers support a $461m valuation though?
Question to self really.
SPY share price back into the 130’s where it was 6 months ago
Is the love affair with SPY over?
Why it shud be foolish to buy SPY at $ 1.30 levels while it was great buy over $ 1.75 ...promoted by all Gurus ...fails me ...
Maybe different time horizons ...talk of $ 2 soon becomes race to $ 1 ....no one talks or thinks long term ...buy and holdable good stocks are dead ??
Or is SPY good for that still thus much better priced then before ??
There has been modest selling amongst some of the substantial holders, with a handful filing SSH notices with holdings coming down a percent or so, but overall volumes during the SP compression have been lower than average. NZX/ASX aggregate daily turnover over the last year is 329.5k shares/day, last 20 trading sessions t/o has been 266.4k, last 40 days (2 months) 209k, and l60 trading days (3mnths) 274k. So not really the stampede Balance refers to.
But why would instos be selling? Probably taking some profits after an exceptional run (both financially and in the SP) along rational I outlined below on 21 June when the SP was at $1.78.
Given the SP was touching on 60c in mid 2022 and peaked very briefly at $1.94 its clear the SP overshot in the short term and plenty of substantial profit taking to be had.
Another day to day issue at play is the company discontinued providing its quarterly trading updates. Given the strong operational and financial performance that kept a lot of positive news flow which probably aided the momentum. For the 2024 financial year to date there would have been two quarterly updates provided by now, which haven't (although a snapshot of Q1's excellent financial results were provided in the AGM preso) and it won't be till the end of november before the half year results are released. I think this adds to and creates a 'pop and flop' trading element to its SP movements.
Long term risk free rates have risen markedly in the last 3 months so high growth, high valuation companies ought to have their SP marked down accordingly.
A huge growth opportunity exists for the company with the potential conversion of up to 30,000 NZ terminals they currently lease to taking over the acquiring function. I suspect that is why a lot of the large instos are still hanging on to decent sized parcels. The financial impact of that not reflected in broker forecasts or consensus estimates as early days, but if they pull it off, it'll turbocharge an already fast growing profit base.
https://www.nzx.com/announcements/422376
Interim Financial HighlightsThe Board of Smartpay is pleased to announce its interim results to 30 September 2023.
Revenue$46.9mA 33% increase on theprior year $35.4mEBITDA*$10.6mA 31% increase onthe prior year $8.1m**
NORMALISEDProfit Before Tax$4.8mA 68% increase on theprior year $2.8m**
NORMALISEDNet Cash$2.2mA 64% increase on theprior year of $1.3m
Monthly AustralianAcquiring Revenue$7.1m atSeptember
If anyone who was able to listen to the investor call could kindly pass on any informative additional information, or comments as to how upbeat the tone was, that would be much appreciated.
I'm underwhelmed by some of the corporate-speak gobbledegook in the presentation.
Astute trading sees Milford increase holding inbSPY at average of $1.10 ….sell at 173 and buy at 135 …well done them guys
http://nzx-prod-s7fsd7f98s.s3-websit...568/409641.pdf
WAM continue to build their stake
http://nzx-prod-s7fsd7f98s.s3-websit...936/413630.pdf
key catalyst for this year - shifting NZ leases into transaction acquiring. Kick off should be around mid this year and hope to get more visibility on that in May when the March YE results are released.
SPY share price back below $1.50
Was looking good a few months ago getting close to 2 bucks
Suppose punters wil get excited again and give 2 bucks a good go next time
Most likely some will put their TSK into this share when time comes where people will let half, or all of their TASK go. I already have SPY, but will buy more if the price is right. Won't surprise me that this will be the next share to get a takeover offer within a couple of years.
https://hotcopper.com.au/threads/7926815/
Presso out
You’d think with what the latest update says SPY share price should be about 2 bucks instead of languishing where it is.
Need to drum up support
http://nzx-prod-s7fsd7f98s.s3-websit...757/419441.pdf
Where is the SPY champion, Muse? Need him to rally the troops