ZIP (ASX) Ann: Becoming a substantial holder

Originally posted by nakervirus: ↑

Have a look at the trajectory:

See comparison below for 1H23 v 1H24:
Revenue increased from $333.5 million to $430 million ($96.5 million increase)

Interest expenses increased from $65.4 million to $98.3 million ($32.9 million increase)
Bad debts increased from $86.1 million to $93.5 million ($7.4 million increase)
Bank fees increased from $61.3 million to $62 million ($0.7 million increase)

So effectively, with a $96.5 million increase in revenue, there was an increase of $41 million in associated costs.

This is also in a period of high interest and high inflation. I firmly believe that they have shown they can keep bad debts under control, and that as interest rates drop and inflation settles the bad debts will also drop further as consumers will have more relief from their home loans etc. In addition, over the next couple years as interest rates are dropped back down, I have no doubt Zip will refinance their loans at lower interest rates which will decrease their interest expenses. BNPL is still also only a very small portion of the whole market, and independent studies have shown they expect this sector to grow signficantly over the next 5 years.

So over the next 5 years, revenue will increase as indicated by the studies, and interest expenses and bad debts will reduce.

So we also need to look at operating costs:
Salary expenses decreased from $83.2 million to $72.5 million ($10.7 million decrease)
Marketing expenses decreased from $25.7 million to $21.2 million ($4.5 million decrease)
IT expenses decreased from $23.5 million to $20.8 million ($2.7 million decrease).
Other expenses increase from $23.7 million to $34.9 million ($11.2 million increase).

So effectively, with a 96.5 million increase in revenue, there was a decrease of $6.7 million in operating costs. Which means they can continue to grow without increasing operating costs significantly (and in fact they probably could reduce operating costs further if they felt it was needed).

As far as I'm concerned, there is virtually no doubt that they will be profitable next year.

Regarding the sustained price, 8 days isn't a lot - but it has been high volumes at this level. Haven't checked but I'd estimate almost 200 million shares traded at these levels. That is a fair chunk of the shares available, which means a lot of people are holding around this price, which makes it more sustainable in my opinion.

Regarding the cap raise, the capital raise in June 2023 was at a 6.9% discount.
The capital raise in December 2022 appears to be at a 0% discount?
The capital raise in March 2022 was at a 2% discount.
The capital raise in February 2022 was at a 14% discount.

And the company is in a far better position now that it has ever been, so the disount wouldn't be much in my opinion. And certainly not a 46% discount which is what you suggested (70 cents based on current price of $1.30).

Expand

Great Analysis.

Then on top of these profits add in new products to their IT platform (App) to their massive customer base and that is added instant profit on top!

Careful - we may be talking just too much sense. Some here are saying BNPL just can’t work out as a business model - hmmm how long have ZIP been a going concern and ZIP now proving them wrong with profits. Ohh well time for them to find some other cherry picked data points to cling onto lol

No.	Vol.	Price($)
7	639873	$1.88

No.

Vol.

Price($)

639873

$1.88

Price($)	Vol.	No.
$1.89	149904	4

Price($)

Vol.

No.

$1.89

149904

No.	Vol.	Price($)
1	1588	1.880
2	21000	1.870
2	7414	1.865
4	13550	1.860
4	25255	1.855

No.

Vol.

Price($)

1588

1.880

21000

1.870

7414

1.865

13550

1.860

25255

1.855

Price($)	Vol.	No.
1.890	15000	1
1.895	171	1
1.900	56588	4
1.905	110000	2
1.910	64314	4

Price($)

Vol.

No.

1.890

15000

1.895

171

1.900

56588

1.905

110000

1.910

64314

(20min delay)
Last $1.89		Change -0.125(6.22%)		Mkt cap ! $2.385B

Open	High	Low	Value	Volume
$1.95	$1.98	$1.85	$54.15M	28.60M

Great Analysis.Then on top of these profits add in new products...

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