Herewith some analysis on Tyro BENCHMARKS USED Used direct comparators Adyen, Square and Stone Co.Also used MC, Visa and PayPal. PROFITABILITY A lot of these businesses are not profitable at the EBIT level including Tyro, Square and StoneCo. The metric that seems to be used is gross profit as a percentage of revenue. This makes sense as they all have to pay fees to banks at different levels. On a gross profit to revenue then Tyro at 41%, three direct benchmarks in range 20 to 60% and three other benchmarks in range 45 to 82%. Visa and MC particularly profitable as their pay away fees not as high.Tyro is a reasonable performer here. BALANCE SHEET MANAGEMENT Tyro gross profit to Total Assets is 37% versus direct benchmarks in range 4 to 59 % and three other benchmarks in range 21 to 63%.Tyro is a good performer here. Tyro cash to total assets is 48% versus three direct benchmarks in range 23 to 67% and three other benchmarks in range 17 to 34%.Tyro in a good position here. Tyro equity to total assets is 77% versus direct benchmarks in range 31 to 38% and three other benchmarks in range 22 to 48%.Tyro seems to be very well capitalised. OTHER MATTERS Tyro limited to Australia with all other players worldwide except StoneCo in Brazil . Lower growth premium for Tyro in my viewShareholders taking about 14% off the table in terms of market cap. Tyro not involved in online payments and have only just started. All the growth in payments have been in on line. In China most payments done via We Chat and Alibaba and they do not use payment terminals like Australia. It is bar code driven .Tyro could then very easily lose all its business if this method becomes popular in Australia. I semi sense that Tyro is like a Latitude. An old fashioned business to some degree and busy trying to improve itself.Tyro is the smallest player by a big margin for all benchmarks used. PRICING Tyro is cheap relative to all benchmarks.Using gross profit as the performance metric then Tyro is worth around $3.20 TO $3.50 on a conservative basis. Morgan Stanley have a valuation range of $3.20 to $4.60 . I do not disagree with this range and my top value estimate isAbout $4.30 CONCLUSION Even at the top of the range, $2.75 it is cheap. Stag potential is reasonable with around 15 to 25% possible stag. I think the downside risk is low with a good chance of a reasonable stag and liquidity will be very good.
