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ASX 200 (XJO) flat, Afterpay (APT) up again

The ASX 200 (ASX: XJO) is currently flat, holding steady at above the 6,100 level.

Afterpay Ltd (ASX: APT) eyes more growth

Afterpay has announced an acquisition this morning to gain access to mainland Europe. The Afterpay share price is up 4%.

Afterpay’s subsidiary, Clearpay, is going to acquire Pagantis.

Afterpay said it’s going to accelerate its growth and increase its global footprint. The European Union is the next logical step for international growth due to its large ‘millennial’ population, large fashion and beauty retail markets and significant debit card usage.

The buy now, pay later business disclosed that the addressable ecommerce market in the EU exceeds €300 billion.

Pagantis is a provider of BNPL services as well as traditional credit across Spain, France and Italy with regulatory approval to operate in Portugal. The addressable market in these four countries is more than €150 billion.

Management believe the acquisition will de-risk the launch of the Clearpay-branded platform across the EU market with a targeted launch of FY21’s third quarter.

Pagantis has 1,400 active merchants and 150,000 active customers.

NBQ – the seller – will receive at least €50 million for Pagantis. It will also receive other payments if the value of Pagantis reaches certain levels.

Zip Co Ltd (ASX: Z1P)

The Zip share price is up 11% after the buy now, pay later provider announced an update from acquisition target QuadPay.

There is going to be a meeting for shareholders to vote on the proposed acquisition at the end of August 2020.

Zip said that QuadPay achieved record monthly transaction volume of more than US$70 million in July, representing a 30% increase in the June quarter average and a 600% increase year on year.

During July alone it added 133,000 customers and surpassed the 2 million customer milestone in August.

QuadPay has partnered with multiple Internet Retail 100 merchants including Fantatics (a global sports merchandiser) and Mercari (an online marketplace), representing combined online volume of more than US$3 billion. Other merchants it has added include Caleres Group.

Management said that the enterprise sales pipeline going into the holiday period continues to remain strong.

QuadPay has established a strategic partnership with Fiserv (a global provider of payments and fintech services) to offer buy now, pay later services across its US based merchant base, launching with Fanatics. It has also partnered with MasterCard Vyze to enable BNPL within the Vyze alternative lending stack.

QuadPay has secured a debt facility of up to US$200 million from Goldman Sachs, with mezzanine financing provided by Oaktree. This credit will be used to expand to new merchants and customers in the US. This will allow QuadPay to orginate more than US$2.5 billion on an annual basis – the company said this provided significant headroom for future growth.

In terms of profitability, QuadPay has net transaction margins (NTM) of more than 2%.

Big dividend from Fortescue Metals Group Limited (ASX: FMG)

In FY20 Fortescue revealed that it grew revenue by 29% to US$12.8 billion.

This was achieved with record shipments – up 6% to 178.2 million tonnes and a 21% increase in the average realised price to US$79 per dry metric tonne (dmt). However, the amount of ore mined was down 1% to 204.3 million wet metric tonnes (wmt).

Fortescue’s underlying EBITDA (click here to learn what EBITDA means) improved by 38% to US$8.4 billion. The underlying EBITDA margin rose to 65% thanks to the higher prices and continued focus on cost management. C1 costs dropped 1% to US$12.94 per wmt.

Underlying net profit after tax (NPAT) improved by 49% to US$4.7 billion, which equates to a return on equity (ROE) margin of 40% according to Fortescue.

The company reported that it made US$6.4 billion of operating cashflow and free cashflow of US$4.4 billion.

The Fortescue board declared a final dividend of $1 per share (up 19%), bringing the full year dividend to $1.76, up 54% on the prior year. That’s a dividend payout ratio of 77% of FY20 net profit.

Net debt at 30 June 2020 was US$258 million, down 88% from a year ago.

Other reports

There have been plenty of other reports released today which the team at Rask Media have covered.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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