APT operates on very thin margins and this makes it vulnerable...

APT operates on very thin margins and this makes it vulnerable to large losses in recession. In best case scenario on their current business model, they will make 0.7% NPAT of their total underlying sales.

The math is very simple - Their revenue is 5% (4% merchant + 1% late fees), direct cost is 3% (Management NTM aim is 2%), on conservative basis their operating cost will be 1% (large part of the operating cost is variable and will need to be scaled up as underlying sales increases). So at best they will make 1% NPBT and add 30% tax, so we come to 0.7%.

Australia is now very likely going to a recession, this will pressure both sales growth and also the loss ratio.

In addition APT's existing holders will be significantly diluted over the next few years due to the stock options that have been issued.

In this scenario, a market cap of 9bn still significantly overvalues the company. My rough estimate of a fair value of the company is ~$12, now it may never go that low or it may go lower. It will all depend on the sentiment and on the mood of the market.

At the end of the day - We only have to wait for few years to find out what really happens. Will they ever make money and if so then how much?