In light of the recent surge in discussion in regards to the predicted performance of Z1P following the release of its quarterly results early this week, I thought I would share some insight into the business itself as well as the overarching Buy Now Pay Later (BNPL) sector in which it is a dominant player.
Listed on the ASX in 2009 as a mining company; namely Rubianna Resources, the company originally focussed on drilling in at its Peak Hill site in WA. After unsatisfactory performance mining in WA, the company underwent a significant restructuring in 2015, acquiring Zip Money Holdings Pty Ltd and its subsidiaries. Since then, the company has experienced unparalleled growth. In 2015, the company saw revenues of $400,000. In 2019, that figure was $82,000,000.
Such growth, however, is not surprising considering the mammoth that is the BNPL sector. According to Ibis World (a highly-reputable source of academic information), this sector is Australia’s fastest growing industry, with revenue growth from 2019-2020 at 65.8%. This is based on expert analysis of a database of more than 750 Australian industries. Further, academics at Ibis World believe that Covid-19 will have a positive impact on the BNPL sector. The scholars noted that sluggish economic growth, the severe bushfires and subsequent outbreak of Covid-19 are expected to weigh on consumer confidence, discouraging consumers from purchasing (in a lump sum, on the spot payment) discretionary items. Consequently, more people are likely to use BNPL services to purchase goods and services that they need immediately but cannot pay upfront. Z1P has enjoyed an average growth in revenue of 300% per year since its transformation from a mining company into a financial service provider.
While the company is not yet profitable, the trend in its profit margin from being -126% in 2017, to -57% in 2018, to -13.4% in 2019 is very favourable and indicates a profitable 2020 on the back of massive growth. Its current gearing level of 88% is also very satisfactory and indicates exposed to significant financial risk.
As mentioned above, Z1P will be releasing what is almost certainly going to be a fantastic, not-priced-in quarterly report. This judgement is based on the facts detailed above. In anticipation of such a release, despite much uncertainty in financial markets, Z1P has seen three consecutive days of doubling volumes, with the OBV indicating this is mostly on the buy side. Moreover, the value of transactions have increased from, $54,000,000 on Wednesday to $222,110,000 on Friday, of which was an all time high in regards to the value of transactions. This indicates substantial confidence in the company, and the fact that it beats the value of transactions seen on the day of the announcement that Z1P would be acquiring the US BNPL provider, QuadPay, is a strong intimation of significant performance during this week.
Considering the general market sentiment, and Monday (as well as the week over all) could not be a better day for Z1P to flourish. On Friday evening most were pleasantly surprised to see Wall Street surge as Gilead data saw fears of increasing cases of Covid-19 disappear. Moreover in Australia as well news that the country will be utilising Remedesivir in treating the virus will play a strong role in supporting market sentiment. Charlie Ripley, senior investment strategist for Allianz investment Management in Minneapolis noted: “That (news re Gilead’s treatment) kind of dampened some of the concern that’s been building over the past few days around increased virus cases in the southern states.”
Therefore, Z1P can be seen as a company with significant potential even in the midst of the Covid-19 virus outbreak. It is a company at the forefront of Australia’s fastest growing industry, an industry of which is attracting global attention. This week is set to be a tremendous week for the company, with market sentiment, technicals and fundamentals (quarterlies) all likely to see Z1P shoot up, literally, in a way akin to a rocket ship. DO NOT MISS OUT, BUY AT OPEN TOMORROW OR FORGET GETTING IN AT A PRICE <$10!
Z1P Price at posting:
$7.24 Sentiment: Buy Disclosure: Held
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