Hi dabozza. Interesting to hear your take on things. My views are almost the complete inverse to yours. Time will prove one of us right.
1. I think it’s just you.
2. A fintech with a huge addressable market, massive GDV growth and market leadership in a couple of verticals that actually delivers an EBITDA of 26%! You’re a tough audience. Given the scale ability of the tech platforms EBITDA margins will grow from here. I have it at 29% for FY21.
3. G&I grew GDV by 26% pre-COVID and 11% for the year. GPR grew 54% and VANS up 62%. Yes, EBITDA growth was only 10% in FY20 but given the run rate in July, FY21 should see EBITDA growth push 80%.
4. Yes there was a capital raise but the company has $120m cash, no debt and newly acquired diversification.
5. The cards business is not a credit card. They are holding and investing the cash so they disclose the asset and matching liability. Where would you have them put it? And FYI, Westpac carry credit obligations on their balance sheet.
I have them on a prospective PE of 19 times. Given the scale ability of the tech and industry tailwinds I thinks it’s cheap.
Anyway, it’s differing views that make a market.
EML Price at posting:
$3.06 Sentiment: Buy Disclosure: Held
(20min delay)