Ann: Response to ASX Price Query, page-245

Is iSignthis, the Neobank Set To Attract Investors After Continuous Hgh Rides On ASX?
By
Team Kalkine
-
September 13, 2019

Stock picking is not an easy task and is surrounded by an ocean of risks. However, once an investor taps the right company, the returns generated can be an absolute bliss. This article is about one such stock- iSignthis Ltd which has been a hot topic of discussion amid investors and researchers. The stock of the company has given a remarkable return of approximately 447.06 % in the past one year (as on 12 September 2019).

Let’s study the company in detail and unfold its recent updates:


Get to know iSignthis Ltd

While a lot of researchers and industry experts are tagging it as the next big neobank, capable of challenging robust players like the Big Four, iSignthis Ltd (ASX: ISX) is an eMoney, payments and identity technology company, dual listed in Australia and Germany (ASX and FRA, respectively).

The company provides specialist banking services and aims to enhance online payment user experience, to cross-border, regulated and high value businesses. A few of its services include card acquiring, settlement, a complete end customer onboarding solution, IBAN accounts, SEPA transfers, remote identity verification and deposit-taking E-Money services.

ISX owns the Paydentity™ Know Your Customer’s Customer platform, along with Paydentity™ identity verification, Probanx® CORE banking and ISXPay® payment platforms.



The Paydentity ™ ecosystem (Source: ISX’s Investor Presentation)


ISX’s Operational Update

On 9 September 2019, ISX pleasingly notified that as on 31 August 2019, the actual processed transactional volumes within the EU and AU networks had continued to grow in line with expectations as new business customers are onboarded, and the annualised monthly GPTV was over A$1.1 billion, which zoomed up by 160% when compared to 30 June 2019. The business customer approvals rose by 28% to 270, as the underwriting/approvals team thrived to work through the growing pipeline of business customer applications built by the sales team.



(Source: ISX’s Report)

S&P Dow Jones Indices Addition

On 6 September 2019, S&P Dow Jones Indices notified about the changes in the S&P/ASX indices, which would be effective at the open of trading session on 23 September 2019. As per this update, ISX was categorised (added) under the S&P/ASX 300 Index.

ISX’s 1H19 Results

On 28 August 2019, for the half- year report ended 30 June 2019, ISX recorded a total audited operating revenue of A$7.5 million, up by 49% on a Y-o-Y basis. The total revenue including other income was A$8.2 million, up by 48% on a Y-o-Y basis. The 1HFY19 statutory loss after tax was at A$0.7 million, down by 75% on a Y-o-Y basis.

The EBIT for the 1HFY19 was at A$0.3 million and ISX achieved a cash flow positive position in mid-May, resulting to the cash balance as at 30 June 2019 to be of $9.9 million. The client funds held at the end of the 1HFY19 were approximately of A$34 million and ISX continued to elect to expense its software development costs, in lieu of capitalising them.



Recent GPTV update (Source: ISX’s Report)

The company has maintained the current EBIT guidance for FY2019 of $10.7 million.

Appointments and Agreements

On 31 July 2019, ISX onboarded a new Group CFO, Ms Elizabeth Warrell. This had the company in focus, with the industry experts impressed with the company’s performance and this recent appointment, as Ms Warrell has served as a National Australia Bank Ltd (ASX: NAB) executive, as a General Manager Finance, Consumer Banking and is expected to benefit ISX with her expertise of over 20 years in the banking and financial services experience in Australia and internationally.

Besides this, ISX entered into an Australian Principal Member licensing agreement with the Asia Pacific based regional subsidiary of Visa Inc (in Singapore), which would enable the company to act as a merchant’s card acquiring institution, process the virtual and remote payment mechanism and conduct settlements on account of the merchant from cards which would be issued across the world by different Associate member institutions or Visa Principal.

As per the usual norm, ISX would generate revenue via the percentage fee known as the Merchant Discount Rate on the sale amount processed on behalf of the merchant.

ISX has been on top of the charts when it comes to such memberships, and is a principal member of Mastercard, Diners & Discover in Australia, China UnionPay and likewise associations across the European Economic Area as well.

FY2019 Q2 (H1) Investor Update

On 30 July 2019, ISX provided FY2019 Q2 (H1) Investor Update, wherein, CEO Mr John Karantzis expressed that ISX is differentiated by its unique digital identity and banking services for both businesses and financial institutions across the Aussie land and the EEA.

Further, in its Investor update, the company notified that the AU$ Gross Processed Transaction Volume on the Tier 1 network had remained steady. The non-inclusion of new merchants had enabled the company to manually verify automated SWIFT inflow systems and begin card reconciliation and Merchant Settlement Systems verification. Moreover, ISX had begun the existing merchant annual KYB/KYC cycle.

What is driving investors towards ISX?

Considering all that is going well for the company, industry experts believe that ISX could be the next neobank to compete with the well-established banks and financial service providers in Australia, with its uniqueness, tech-savvy and prompt approaches. The share price of the company has more than doubled in just a year (approximately 255%) with the share price up by approximately 87% over the last quarter. To support this uptrend and growth traction for ISX, its shareholders have increased by approximately 178% in the last three years, depicting that investor sentiment has been well taken care by ISX.

After the release of its 1H19 results, ISX’s profitability is expected to improve significantly in the second half, in adherence to the robust guidance, which would be likely supported by the strong Gross Processed Turnover Volume growth, increasing approvals and merchant service fees. Moreover, Ms Warrell’s inclusion as CFO bears potential to take ISX to an altogether new level.

Besides this, the concept of neobanks is attaining global attention, and ISX has been rising within the payment authentication and neobanking space. What’s attracting investors is the continued growth in the Australian payments sector and the key partnerships, along with a positive cash flow, positioning ISX in a secure radar, amid whispers of recession and a projected global downtrend.

Share Price Information

After the close of the trade session, on the Australian Securities Exchange, on 13 September 2019, ISX stock was last quoted A$1.020, whopped by 9.67%, with a market capitalisation of A$1.02 billion and approximately 1.09 billion outstanding shares. In the past three and six months, the ISX stock has generated returns of 40.91% and 244.44%, respectively, while its YTD return is of 520%.

Given the optimistic outlook and welcoming revert of the market and investors, it would be interesting to witness ISX unfold its activities and progresses in the remainder of FY19. We are committed to provide lucrative stock market input to ease decision making and analysis process of investors and encourage you to stay tuned to this space to read more about ISX and other players.