Ann: Zip partners with Harvey Norman, page-258

Some info for GoldBear and others who been here since <$1 + other LTH’s who have faith in ZIP’s prospects. Quality read throughs from a Shaws Research report this month. As posted before they have been consistently on the money with SP targets - in fact never missed one 12 month target in the years I have held ZIP. Some insights:
Highlights: (P1)

• announces ahead of expectations update for November across Both ANZ & “well ahead” in key US market.
• TV in November was $577.1m at consolidated level. +100% YoY & up a material +44% on October alone with Xmas to come. Annualised TTV $7Bn & group growing strongly across customers, revenues & TTV in every market of operation.
• the fastest growing BNPL in USA continues. In November ZIP was the #16 in US App Store alongside Behemoths and at various times ahead of key peer APT.
• In November net customer accreditations rose by +10k per day, average spend by customer on a qtr basis was $330, evidencing likely strong adoption.
• Quadpay has grown materially in every month since April. Revenues now greater than 50% of group total.

Competition & risks:

• international expansion & a land grab into large markets the name of game in BNPL. ZIP delivers the widest product platform & technology play of any BNPL and isn’t being rated accordingly.
• Unlikely that 4% merchant fees will exist at scale.
• with ZIP at 60-80% discount to APT on annualised revenue basis, with 50% of the customers, 10% of the MC & a fast growing overseas arm, proposed - could ZIP become a target?

Drivers / Catalysts / Cautionary: (P4)

• Book performance has been strong to date but may not always be the case
• Liquidity. As small cap business listed on ASX ZIP has relatively low level of liquidity and may affect volatility of share price or efficiency of market in pricing valuation of the business.
• Higher competition likely to manifest itself within compression of merchant fees, larger Merchant tendering process etc. Competition increasing but see APT & ZIP becoming more dominant.
• Sees Fintech that drives credit & payment solutions still at beginning of the adoptive curve.
• Structural tailwinds to continue to grow adoption.
• Continue to take share from major incumbents whilst growing size of overall pie.
• ZIP has competitive advantages across 3 key value chains - customers, merchants, funders, - “a rare position to be in”.
• Acceleration material in USA. Notably in USA November TV was $264.2m, +205% YoY and +65% on October alone.
• Relative value upside. based on last data points to market the US Business of ZIP is delivering annualised revenues ~80% of APT with a higher NTM and revenue yield. “ZIP has materially underperformed closest peer APT and it has us scratching our heads” with the relative value opening to ~70% on a P/Sales basis even as pay in 4 (3x annual return) has progressively dominated.

12 month SP target sits at $10.95. Just some snapshots from a lengthy report which was prepared earlier into month when SP was $5.95.

It is independent and a timely reminder of the quality of the company. Reassuring but at all times DYOR.

All comments and takeaways are with all usual disclaimers. Not personal advice, not recommending particular course of action.