Ann: Q4 FY20 quarterly business update, page-66

I must admit I've been a bit lazy with my calculations too when I first started buying last year - it felt really cheap and I gave it a very low weighting as a starter position. I've been stupidly slow to digest the strong execution in the US and the traction in payments in COVID.

My understanding is that the blended return on equity (before corporate costs) is above 50% so I've used a rough proxy to derive a corresponding book value. But I realise after seeing your calculations that valuing the present sub-scale business is a mistake given the early stage of its lifecycle and the quick growth trajectory. What we should instead be thinking about is the pathway to maturity and what that looks like.

So sincere thanks for sharing your research and calculations.

With regards to payments, my initial thoughts are that it's probably best to do lending + payments separately. Right now, a very lame methodology that is prevalent in payments is a multiple of gross profit - when looking at peers, the market is currently willing to pay 20x+ GP (EML & PPH). I realise the folly of thinking this way, but it is possible that $10-20m GP (contract revenue in your workings) alone can be priced by the market at higher than the current market capitalisation.

Perhaps going with earnings is best after all.