I doubt it - it wasn’t all that positive. They are still banging on about a cap raise in Fy24 and fair value goes up to 90c if it doesn’t happen, but they believe it will. The coverage in AFR was more positive. Morningstar also had this to say about NPAT.
”We forecast normalised NPAT to trough at AUD 58 million in fiscal 2024, versus AUD 79 million in fiscal 2023, before recovering to AUD 75 million by fiscal 2027. This equates to an 8.0% CAGR from fiscal 2022. Our projected normalised NPAT averages roughly AUD 71 million per year from fiscal 2023-27. This is below the pre-COVID-19 average of roughly AUD 90 million a year (that is from fiscal 2016-19). We forecast net profit margins of 10% and returns on equity of about 8% over the long term. While we anticipate higher funding costs and bad debts to bite into earnings, the combination of cost-outs, higher product pricing, transaction volume growth, and overall manageable bad debt rates should help Humm remain NPAT profitable over our forecast period. Our valuation assumes transaction volumes in Humm’s Point of Sale Payment (PosPP) business will average roughly AUD 1 billion per year, below fiscal 2022's AUD 1.3 billion, with growth in big-ticket financing volumes being offset by progressive declines in small-ticket and overseas BNPL volumes. We forecast the Australian cards business growing transaction volume at the low teens from fiscal 2023-27. Elsewhere, we forecast the New Zealand cards and commercial and leasing businesses to compound transaction volume at a CAGR of 4% and 15%, respectively, from fiscal 2023-27.
We assign Humm a Very High uncertainty rating. Aside from lack of earnings visibility as Humm undergoes a restructure, credit, regulatory and funding risks require consideration.First, Humm is at risk of a significant spike in credit losses where it has to write off a material portion of its receivables. Its strategy entails financing long-dated, higher order value items with greater probability of default, while its pay anywhere feature results in Humm lacking control or information of its customers’ spending habits. Amid a major credit event, it could see a substantial rise in hardship or nonrepayment claims. The restructured Humm group has withstood COVID-19, but its ability to undergo a severe credit event, such as one without adequate fiscal and monetary policy support, is untested. Regulatory risks persist. There is potential for its BNPL users to overspend and fall into hardship due to the ease of signing up for a BNPL product. Moreover, the lack of BNPL regulation also creates an uneven playing field that’s disadvantageous to traditional credit. These are material ESG considerations, and we anticipate heightened regulatory scrutiny as BNPL transactions grow as a proportion of total retail sales. Any form of regulatory attacks could reduce the appeal of Humm’s product, lead to consumers opting for cheaper financing options, or lower sign-up rates and transaction frequency--ultimately pressuring fee margins.Given Humm’s reliance on external funding to support its growth, any dislocation in capital markets or an inability to meet growth expectations could result in it: (1) being unable to obtain financing when required; or (2) having to secure funding at unfavourable terms. This is as the quality of its receivables are lower than mortgages. We understand Humm presently has to provide more credit enhancements than the banks. These include embedding excess spreads, investing in the lowest-rated notes under its securitisation program and providing restricted cash.”
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