Well that first post aged like milk! I didn't think they would...

Well that first post aged like milk! I didn't think they would actually go through with the SZL deal. But I was very close on the Q2 results with the exception of UK results.

I've updated these numbers based on the following:

• the recent HY report and SZL announcements. 25% overlap of customers as they suggest and all of the extra overheads for this FY.
• Reduced TTV margin of 6.1% long term.
• Bad debts hover around 3.2%, and stay there.

I really appreciate the feedback so far, and have the following responses to questions raised:

• what about warehousing? Included at same rates as previous, then +1.5% from 2023 onward. Those facilities don't appear to be stressed at all anyway.
• capital raising risk? All expected raising to date included in the yearly change in debt and funding. But yes they could be more.
• riskdilution? Accounted for in the SOI increases to date at 8%pa.
• competition risk? Not accounted for, or any exit from smaller competitors. Note that % of TAM is still well under a 1%.
• recession risk? Not accounted for.

Table is below. Overall thoughts:

• Trading close to a PS ratio of 1.5. AFRM is around 9.
• The SZL deal and bad debt % has put a real dent in the timeline to profitability, adding at least a year. It essentially cut my 5 year target by 75% to around $14. If you bought today that is still a reasonable 8x return in 5yrs, but I suspect you'll be able to wait a year or two to still get a similar return quicker - if the management can steer this through.
• They have got to find a way to cut down the bad debts at scale, it is absolutely choking the gross profit margin. The way out is to get it near the credit cards in terms of % bad debts, ignore the UK and get the TTV to around $60bn.