SPY - Smartpay Holdings

[Muse]

2,500,000 share just exchanged hands. That's a good sign of a big investor

on the NZX no less.

[Balance]

on the NZX no less.

Usual story of NZ stock leaving NZ into Oz?

Augers very well for SPY!

[Muse]

2,500,000 share just exchanged hands. That's a good sign of a big investor

plus 481,230 traded in one parcel pre open

[Muse]

Cuscal (SMP switching provider) appointed BOFA as lead manager and doing non deal roadshows across OZ.

AFR claims IPO could value business up to A$500mn.

Had 30 June 2022 NPAT of $23.4m.

https://www.afr.com/street-talk/paym...0230514-p5d88i

Hot sector.

[DarkHorse]

Did this a week ago but too busy during the days to post much anymore.

An indicative BOE analysis on the impact of transitioning the NZ fleet from rentals to transaction acquiring.

AU margin per terminal (all NZD)

• FY23 Australian acquiring revenue: $60.5m (actual)
• Ave terminals throughout the year: 12.6k
• Revenue per terminal: $4,800
• Acquiring GP margin: 55 to 60% (lets call it 55%)
• Gross profit per terminal: ~$2,600

NZ margin per terminal (all NZD)

• FY23 NZ service income (rentals): $13.7m (my estimate)
• Ave terminals: 30,500
• Revenue per terminal: ~$450
• Rental GP margin: 85 to 90% (lets call it 90%)
• Gross profit per terminal: $400

Face value differential: $2,200 multiple that by the number of NZ terminal fleet (30,500) and you get an obscenely large uplift in incremental gross profit ($67.1m - yikes!)

Of course that may prove to be an implausible outcome....lower purchasing power NZ (ttv per terminal) together with the structure of the payments industry could mean margins might be structurally lower in NZ. And not all the NZ fleet maybe suitable for Smartpay's acquiring product. So in the absence of more detailed understanding, I calculate the likely maximum size of the prize based on like for like KPIs, and then run some downside / sensitivity scenarios.

Sensitivity analysis

• Assume a 50% discount to to the margin differential per terminal: $1,100
• Assume 50% of the NZ fleet is suitable
• Incremental GP uplift: $16.8m
• Or - assume 25% of the NZ fleet is suitable: $8.4m (half the above)

Those are very indicative and just to get a feel for the potential range of outcomes. The other thing to consider would be what the additional TTV pulled through from converting the NZ rental fleet to transaction acquiring would do to the switching fees paid to Cuscal. As SMP brings in more TTV it achieves lower switching fees. This has the potential to add a huge sum of TTV so its possible SMP's AU switching fees could fall further depending on how the letter of intent with Cuscal is structured. It's possible it is ringfenced to NZ with fees starting high and falling as as TTV grows as is the agreement in Australia.

Then incremental ongoing overheads, marketing and project costs, which ought to be relatively small given the customer base is already in place and captive. And of course the phasing of costs and eventual revenue.

Or it could all prove too hard and not come to anything.

Either way - exciting times as an existing holder. Flicking some of the existing NZ terminal fleet from rentals to an acquiring provider solution has the potential to make a material step change in SPY's profitability over the next few years.

The numbers certainly point to an incredible opportunity.
I'm just wondering, if switching to the Australian model is such a win-win for the company and retailers, and they simply need to 'upgrade' existing customers, why are SPY only now looking to promote it here?
Why is there nothing prominent on their website about it?
What is the key selling point from the NZ retailers point of view? How much better off will they be?
I'd love to see some calculations from the retailer's point of view...

[Muse]

whoo hoo a bit better than I was expecting
https://www.nzx.com/announcements/412159

[Balance]

whoo hoo a bit better than I was expecting
https://www.nzx.com/announcements/412159

Absolutely outstanding results.

More to come in 2023/24!

[RupertBear]

whoo hoo a bit better than I was expecting
https://www.nzx.com/announcements/412159

A MASSIVE thank you FM for alerting me to this one! What a cracker!

[Mel]

High of $1.75 on the NZX, will be interesting to see reaction on the ASX when it opens shortly

[Muse]

A MASSIVE thank you FM for alerting me to this one! What a cracker!

she's a little ripper alright. all I did was bellow when the run rates started coming through and the operational leverage started to show.