NTM does not equal earnings... it doesn't even include employee costs. It's the marginal transaction profit. Taking out other costs and tax you'd probably see 0.7%. UBS estimates NPAT as a percentage of GMV at 0.64% by 2024, with a 2.0% NTM.
So a $130b GMV in 2025 would give you $910m NPAT with a 0.7% NPAT margin. With a peg of 1 and assuming 50% growth (which is more than paypal was getting at $130b gmv) that's a P/E of 50, so $45.5B market cap IN 2025.
Then with the shares we currently have 270m on issue. Add 40m for the UK and US deal. Then add another 60m at average $50 SP to raise the $3b they'll likely need to service $130b GMV. Gives 370m shares. This is likely conservative, will be many more share based payments over the next 5 years both to executives, employees, and for new deals in new markets to be able to reach that $130b AND 50% YoY growth prospects.
So SP would be $123 in FY25, sounds good, but it is currently FY20. So that'd give you a 2.76x multiplier on today's share price, or a yearly return of 23%.
None of us are here for yearly returns of 23%, I'm certainly not. 23% is not enough of a risk/reward given risks to growth in GMV, risks to NTM from bad debt/competitive margin pressure, and general market risks which could halve P/Es again.
TLDR: APT is not at an attractive entry price for long term investors.
APT Price at posting:
$44.51 Sentiment: Hold Disclosure: Held
