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  1. #2361
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    For Barrs preview out today.
    OUTPERFORM
    Proprietary feedback from over 25 US churches indicates that 1) average total giving for 2020 YTD ranges between +3% to
    +19% vs the prior year and that 2) digital penetration across medium to large churches has averaged 80% over the last six
    months. This is driven predominantly by increased church attendance through online channels, higher levels of aggregate
    generosity and unwillingness by church staff to handle cash. We raise our FY21 EBITDA forecast to US$60.8m against a
    consensus of US$55.1m, applying a conservative +1% for PPH's front book growth rate in FY21. This is principally due to
    COVID-19 restrictions limiting sales contact with prospective customer churches, and church elders postponing technology
    related decisions. We recognise that our forecasts now exceed PPH's current guidance (between US$50m and US$54m) by
    more than +10% and consequently expect the company to tighten or raise its FY21 guidance at the upcoming interim result.
    What's changed?
    Interim results expected to demonstrate jump in digital penetration
    We recognise the wide margin for error in forecasting PPH's 1H21 interim result given the range of potential underlying drivers and
    2H21 split of timing of costs and fees. This is in addition to a traditionally stronger second half of the year due to increased donations
    at Christmas (1H20/1H19 accounting for 44% of full year processing revenue). However, we expect the processing revenue split to be
    more even this year (our 1H21 estimate reflects a 48%:52% split) given the strong donations seen at the start of FY21 and expected
    slowdown of the front book in 2H21. We expect to see a 1H21 jump in digital penetration and forecast EBITDA of US$29.4m.
    Attendance numbers remain firm
    Churches that we have spoken to have indicated that online service offerings have significantly increased overall attendance, with
    one church estimating aggregate attendance to be triple regular physical church. With US churches sporadically re-opening their
    doors since June, state by state, we estimate average physical church to currently account for between 20% and 50% of attendees.
    Many churches are now also increasing the number of services over the duration of the week in light of social distancing, with services
    on a weekday proving popular. We see this as a potential catalyst to drive longer term attendance and donations.
    Valuation
    We raise our target price to NZ$13.86, driven by our increased DCF valuation, more than offsetting the decrease in our implied EV/
    Sales multiple valuation. Our multiple approach is underpinned by our FY22 sales growth rate which decreases to 15% from 17% due
    to the abrupt hike in digital penetration in FY21; which was previously expected to grow incrementally across a number of years.


    NZX Code PPH
    Share price NZ$9.18
    Target price NZ$13.86
    Risk rating High
    Issued shares 275.4m
    Market cap NZ$2,528m
    Avg daily turnover 638.9k (NZ$4,019k)
    Financials: Mar/ 20A 21E 22E 23E
    NPAT* (NZ$m) 26.9 61.9 74.1 89.4
    EPS* (NZc) 9.8 22.4 26.8 32.3
    EPS growth* (%) -3.1 n/a 19.7 20.4
    DPS (NZc) 0.0 0.0 0.0 0.0
    Imputation (%) 0 0 0 0
    *Based on normalised profits
    Valuation (x) 20A 21E 22E 23E
    PE 94.1 40.9 34.2 28.4
    EV/EBIT 76.1 29.6 24.6 20.8
    EV/EBITDA 60.7 27.0 22.8 19.5
    Price / NTA n/a n/a 24.4 12.8
    Cash div yld (%) 0.0 0.0 0.0 0.0
    Gross div yld (%) 0.0 0.0 0.0 0.0
    FY21 EBITDA: Increased from US$55.9m to US$60.8m
    Target price: Increased from NZ$13.05 to NZ$13.86

  2. #2362
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    Thanks for the info Greekwatchdog. I’m excited to see what happens next. PPH is a keeper for me

  3. #2363
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    Hmmm...In my earlier investing years I lost money acting on Broker reports without using alternative discipline confirmations..Where I went wrong was I invested on reported fundimentals (historical) and ignoring the market behaviour..Nowadays I believe in when buying I am buying into the company's market not the company itself..The old market saying.."In a desert water could be worth more than gold"...
    Sentiment rules (the instant need to buy/sell)...especially so in this extremely insanely overpriced market these last few years and more so with FOMO emotion these last 4 months..

    PPH is a high growth company with a lagging share price followed by sudden market correctional bursts ...History has shown that after these market corrections the share price stagnates and starts to lag the fundamentals once again...this lagging behaviour could last months or years depending on investor sentiment toward PPH..

    Chart Trading (TA)...includes buy near support, dont buy near resistance...When there is a trading channel pattern set up as seen with PPH at the moment you will see an increase of shorter term traders dictating the PPH market thereby keeping that channel pattern alive.These trader dictate the momentum and at the moment if you thinking of buying it would be safer to wait for the breakout above the primary resistance (resistance break becomes support), therefore it pays to wait and see...If the price falls back to the bottom of the Trading Channel it pays to buy in at the FAIL or more safely wait for the buy signals.

    Attachment 12045
    Last edited by Hoop; 29-10-2020 at 08:12 AM.

  4. #2364
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    Quote Originally Posted by Hoop View Post
    PPH is a high growth company with a lagging share price followed by sudden market correctional bursts ...History has shown that after these market corrections the share price stagnates and starts to lag the fundamentals once again...this lagging behaviour could last months or years depending on investor sentiment toward PPH..
    Do you think this is still true given the current market sentiment towards tech companies? People seem to be very bullish on tech companies right now (and AIR for some weird reason)

  5. #2365
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    Quote Originally Posted by tango View Post
    Do you think this is still true given the current market sentiment towards tech companies? People seem to be very bullish on tech companies right now (and AIR for some weird reason)
    I believe so..yes PPH is continuously growing but the share price these previous 4 months has once again stalled.

    A good argument could be said that Mr Market overcooks each PPH's share price corrections and it takes a considerable time (breather after each huge rally) for the price to "consolidate" back to "normality" During these lengthy breathers time, it gives opportunities for various factors to come in and interact and then leave..Looking at recent history, one factor was the change of Global sentiment towards Tech stocks starting Aug 2018 and ending a year later. This wave of negative sentiment lowered the multiples with most fast growing SaaS companies this caused their share prices to stagnate or drop...Sentiment waxes and wanes over time..Yes Tango, 2020 has been a year of sunshine for Tech stocks...

    Who knows what is going to happen in the future... perhaps 2021 could be like 2019 when sentiment to tech stocks reverts back to a negative outlook.. and once again lowering their multiples.

    Then again perhaps not
    Last edited by Hoop; 29-10-2020 at 10:32 PM.

  6. #2366
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    There's been a lot of insider selling in the last 6 months which has capped the price. It looks like this has been absorbed and the price has recovered back to all time highs. It's a familiar path to those of us who enjoyed Diligent, where insiders regularly sold parcels. In the end, the fundamentals of free cashflow generation paid off for Diligent holders who bought below 20c, and it will be the same for Pushpay, which only reached that stage six months ago. As long as customer churn remains around 5% and less, it is a winning business model for shareholders.

  7. #2367
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    Quote Originally Posted by KJMLimited View Post
    There's been a lot of insider selling in the last 6 months which has capped the price. It looks like this has been absorbed and the price has recovered back to all time highs. It's a familiar path to those of us who enjoyed Diligent, where insiders regularly sold parcels. In the end, the fundamentals of free cashflow generation paid off for Diligent holders who bought below 20c, and it will be the same for Pushpay, which only reached that stage six months ago. As long as customer churn remains around 5% and less, it is a winning business model for shareholders.
    Yes agree
    Also..insider selling is not always a bad sign..Often, as a company's life cycle matures the insiders that move on are the ones that have their strengths in managing start-ups, innovation, special tech skills creating an access to a market segment, acquiring funding.. etc...They need the money to create new start ups because that's what they do best. They are replaced by insiders who have their strengths in areas such as continuing growth through acquisitions and increasing production/managing margin rates /protecting and increasing market share strategies.

    Another winning formula for us investors could be to follow Chris Heaslip
    Last edited by Hoop; 30-10-2020 at 07:55 AM.

  8. #2368
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    Quote Originally Posted by KJMLimited View Post
    There's been a lot of insider selling in the last 6 months which has capped the price. It looks like this has been absorbed and the price has recovered back to all time highs. It's a familiar path to those of us who enjoyed Diligent, where insiders regularly sold parcels. In the end, the fundamentals of free cashflow generation paid off for Diligent holders who bought below 20c, and it will be the same for Pushpay, which only reached that stage six months ago. As long as customer churn remains around 5% and less, it is a winning business model for shareholders.
    Well said, insiders selling is not always a bad sign. Just need to have an open mind and keep tab on company prospects and wider industry they operate in. Well not long to go for the results to be out next week on 4th Nov, just in time to also know who's going lead US for next 4 years...

    Quote Originally Posted by Hoop View Post
    Yes agree
    Also..insider selling is not always a bad sign..Often, as a company's life cycle matures the insiders that move on are the ones that have their strengths in managing start-ups, innovation, special tech skills creating an access to a market segment, acquiring funding.. etc...They need the money to create new start ups because that's what they do best. They are replaced by insiders who have their strengths in areas such as continuing growth through acquisitions and increasing production/managing margin rates /protecting and increasing market share strategies.

    Another winning formula for us investors could be to follow Chris Heaslip
    Definitely keeping on eye what Chris Heaslip is upto...

  9. #2369
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  10. #2370
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    Quote Originally Posted by sb9 View Post
    Good one eh
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

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