Transactionvalue: If the company is going to reach $20bn in 2021 then the board has reallyset very low target for achieving the LTI vesting target.
NTM: Mycalculation puts the NTM at 2.25% so I am allowing for better performance thanthe target.
Bad DebtCalculation: I prefer using values in financial report rather than a results presentation.Also the provision for bad debts is based on AASB 9 on an ECL approach, thishas also been checked by the auditors. The matter is simple as at YE they had$453m that was not due as yet and they made a provision of $6.4m against it.The numbers were also matched by EY with post year end receipts, so this is themost recent figures which have been audited – Therefore I think this is themost appropriate value to use.
Costs: Costsonce embedded into the business are very difficult to eliminate. Also as the customernumber grows they will need to increase the head count in all the supportfunctions, plus they will also need to invest in compliance and other supportareas. As they will be operating on 3 continents in different time zones the levelof synergies will be lower.
MatrixConversion: The fact that confuses me is that the convertible note is issued byAfterpay US and not the parent entity, therefore not sure if the conversion couldactually be directly in US stock rather than the parent company.
Australianbusiness: Your $61m does not include finance cost or Depreciation & Amortization.The figure reduces to $50m if only finance cost is included. So my 0.75% ofNPBT is off the mark.
Yourestimates:
My view is1% NPAT is very optimistic assumption. If you consider 2% NTM & 30% taxrate then you are only allowing 0.6% for operating cost. So you are estimating thatthe operating cost will be only ~$500m with 15 times volumes when the company alreadyhas a cost base of ~$150m.
Sharedilution estimate of 340m is also very optimistic when the current dilution isalready 310m.
Target ofreaching transaction volume of $85bn in 3-5 years is also very optimistic.
