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What’s Been Driving The Rally In QuickFee?

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

QuickFee (ASX: QFE) has been rallying strongly this month, after releasing strong annual results. The company reached $42m of lending for their Australian business, which is up 15% on the previous year. While this may not seem particularly strong, their US business lent out $8m and grew 70% on the previous year, presenting an exciting avenue of growth. The company still doesn’t make a profit but is rapidly growing its revenue and scaling its client base. Since investors were not expecting the company to grow as fast as it ended up growing, they have revised their estimates for the company’s future financial performance upwards, causing an uplift in the share price.

QuickFee - report
QuickFee has rallied 34% in the past month after releasing strong annual results, catching investor attention (Credit: Accounting Today)

What QuickFee does is handle fee collection for professional services clients. If an accounting firm completes audits a bank for instance, they can put that transaction through QuickFee and be paid immediately. What this means is that the client boosts their cash flow by an average of 45 days and has the money to pay their employees before they complete the service. As such, they do not have to have large cash reserves to pay people in the event that a client does not pay them on time. Companies using QuickFee also benefit from not having to have a department chasing up missing payments, as QuickFee can capitalise on economies of scale to specialise in that service and do it better than anyone else in the market. Because QuickFee is chasing up the late payment, the collection process will not damage the client relationship.

The company also has a high return on equity, which currently sits at 70%. One potential issue though is the possibility of bad debts arising in the business. Bad debts often surface in financial crises, when businesses are at their most vulnerable, so this is definitely a factor that investors should monitor closely.

 


 

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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