Ann: FY2018 Appendix 4E and Annual Report, page-53

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viperofpitstorm

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27/08/18

12:54

Post #: 35204285
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Originally posted by Warnie ↑

Ok reality time..
This will all end in tears IMO.

Capital intensive, reliance on 3rd party cash/ increase funding debt and will be bad debt ridden once through to end of one full credit cycle. I can see it already even with the very limited financial data.

You are a fool if you use turnover metric to justify a low ∼$34m in bad debt/provisioned V $2b sales.
It's actually $142m in rev V bad debt $34m.... from my quick research its at 23% of revenue and rising from previous financial year.

Coming from a finance lending background, and more importantly in the bad credit space, I see many a bank statement with 2-3 Afterpay loans per client.

These clients in particular have bad credit (credit impairment on their credit file) of at least 1 default, a lot have really bad credit, some have 4 or more credit defaults.

I had one Wednesday last week who's in a part 9 debt agreement (form of bankruptcy) and has 3 Afterpays going at once at circa $226 fortnight, client only earns a moderate $565 week (after tax) rent at $295 week, along with part 9 payments of around $190 fortnight. How she eats and lives im unsure?

My guess is they (APT) don't or very rarely credit check, as this would add significant cost to Afterpay's model that already tries to operate at 4% of sales, whereby the Tier 1 credit check cost is around $10 a wack.

Market cap now 32 x revenue, and 120 x EBITA and is running at a loss with increasing bad debt provisions.

Previous financial year 2017 was circa $3m net bad debt on $21m rev or 14%, now its 23% (increasing)
Don't be fooled when they relate bad debt provisions against sales.

I wish them and holders well, the model has some merit, however its a broken model with poor execution, and will come back to bite hard.

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It's actually $142m in rev V bad debt $34m.... from my quick research its at 23% of revenue and rising from previous financial year.

Can you explain how you chose this? I like to hear both sides so appreciate your opinion.

APT Price at posting: $21.22 Sentiment: Hold Disclosure: Held
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Ann: FY2018 Appendix 4E and Annual Report, page-53

Top Stories

Commodity house Trafigura funds Develop Global's copper-zinc Woodlawn play with offtake deal in place

Venture to sniff out high-grade REE targets at Jupiter project, WA

Week 31 Wrap: JORC rules to get tougher; RBA rate hike chance 50/50; US Fed Sept cut still the quo

GreenX picks up prospective copper project in Germany

Uranium prices on the NYMEX are stable, but ASX uranium stocks are sinking on Friday. The answer lies in Kazakhstan

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