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FlexiGroup LTD Releases FY19 Report, Delivering Good Results.

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

FlexiGroup Limited (ASX: FXL) is a financial services group providing, leasing, vendor finance programs, interest free credit cards, lay-by and other financial solutions to consumers and businesses. They are based in Australia but have some multinational operations.

What are the results from FlexiGroup’s FY19?

Today (Tuesday 27th of August 2019) FlexiGroup released its FY19 annual results. The main points are as follows:

  • Statutory Profit after income tax for FY19 is A$61.7 million, up by A$71 million from FY18.
  • Net Income for FY19 is A$372.1 million, up 2% from FY18.
  • Group Cash NPAT for FY19 is A$76.1 million, down 12% compared with FY18 NPAT.
  • Basic EPS is 15.9 cents for FY19, up 18.3 cents from FY18.
  • The full year dividend is 7.7 cents per share (fully franked) bringing the final dividend for FY19 to 14.4 cents per share (fully franked), unchanged from FY18.

Specific results on company operations are as follows:

  • 76 million active customers in FY19, up 8% from FY18.
  • 65,000 retail partners in FY19, up 8% from FY18.
  • A$2.56 billion in transaction volume for FY19, up 12% from FY18.
FlexiGroup Ltd - FY19 Report
(Sawhney 2018).

What were the drivers of this result?

With the advent and increasing popularity of buy now pay later offerings, FlexiGroup initiated their own version called humm, which has performed strongly yielding good results and thus reporting robust customer, retailer and volume growth since its launch.

An increase of 134,000 new customers and 5000 new retail partners in New Zealand increased FlexiGroup’s reach and product demand in FY19. Additionally, credit card volumes increased in Australia and New Zealand in FY19, with 10% and 12% increases respectively.

FlexiGroup’s ‘4 pillars’ strategy set out in February of simplifying business, leading in buy now pay later, streamlining origination and expanding their reach, has seen FlexiGroup deliver strong results due to innovation and delivering on goal setting.

What is the outlook for FlexiGroup?

FlexiGroup announced they will be partnering with Mastercard, launching a product that known as bundll into FY20 which will for the first time allow consumers to buy everything, everywhere, and pay later. bundll would expand FlexiGroup’s addressable market by targeting the millennial shoppers who prefer this method of payment and will now have easier access to such a method.

FlexiGroup will continue to invest into technology, marketing and their products to drive continued customer and volume growth over the coming years to solidify their position as a digital spending powerhouse.

FlexiGroup is now in the first year of a three-year comprehensive business transformation plan designed to build on first mover advantages in non-bank consumer finance. Objectives for FY20 and beyond are accelerating growth; reducing costs; delivering a best in class digital platform; and investing in loved brands.

In FY20, volume is expected to grow by at least 15% as a result of new product launches, audience extension and new partnerships. The company also expects to balance margin with growth and to maintain a double digit return on equity.

What is the market reaction?

The initial market reaction to FlexiGroup’s FY19 results is positive. The current share price is trading at A$1.58 which represents a 12.01% increase (11:30 am AEST).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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