Done some analysis on MM
BENCHMARKSUsed Afterpay and Prospa. Also looked at Latitudenumbers, Flexigroup and a few USA Latitude look a likes for a reality check.
PROFITABILITY
Only Money Me forecasts to make a small profit in 2020.
EBIT to total revenue for Afterpay 11% , Prospa 12%and MM 30%.
MM performs very well here.
Afterpay bad debt write off at 22%, Prospa at 24%and MM 28%.
All surprisingly similar.
Interest Expense to Revenue , (cost of funds) is22% for Afterpay, 17% for Prospa and 28% for MM.
As MM gets bigger you would think their funding costswill drop .
BALANCE SHEET MEASURES
Equity to total assets for Afterpay 79%, Prospa 31% andMM 34%.
If I compare EBIT to total assets then Afterpay at3%, Prospa at 3% and MM at 11%.
MM is a very good performer here.
PRICING
After Pay is stratospheric relative to everyone.
Prospa also very high .
Money me at $1.25 is very reasonably priced even for atech stock.
Could even suggest they couldhave priced MM higher for this IPO.
Unless I am really missing something .
AFTERPAY
So why does the market like this model.
I have not looked at its financing model in depth but itgenerates 32 cents in revenue for every $1 in assets. This compares withLatitude at 15cents, Flexigroup at 15 cents , BOQ at 4 cents.
USA benchmarks in range of 8 to 20 %.
In short, look at the classical old bank , BOQ at 4 centsversus Afterpay at 32 cents.
If Afterpay gets this right they should make a lot ofmoney as their asset base is a lot more productive in generating revenue.
Now, if you look at Prospa, it generates 27 cents inrevenue for every $1 in assets and MM does 36 cents.
Again, MM a very good performer on this metric.
OTHER COMMENTS
MM is the smallest revenue at $46m, After Pay $264m andProspa at $128m.
CONCLUSION
Valuing MM as a tech stock with potential then reckon itis worth around $1.50 to $1.80.
Would also not surprise me if it hits $2.
Even at the above price predictions it is stillsignificantly cheaper than Prospa and Afterpay.
I will be bidding for stock and good luck to everyone
Any other views ?
