Silly old Morgan Stanley ................... SPH Notice - Morgan Stanley and its Subsidiaries
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Silly old Morgan Stanley ................... SPH Notice - Morgan Stanley and its Subsidiaries
Rhetorical question rough answer
Let’s say 170 June 17 was a solid base (consensus F19 revenue forecast ~$110m) and a high of 445
So currently just above 50% fib mark ....and heading to 310 which is the 50% mark.
Next step down is 61.8% retracement at 270 and and then we may as well go to 100% retracement which seems to tie in with what I reckon it’s worth on a net sales multiple ( and remember PPH are forecasting F19 revenues ~$100m which is what punters were expecting when share price was 170 last year
Jeez, Fibonacci things can be spooky.
Glad all the wise punters on Sharetrader have already got out of Pushpay.
Just getting peoples attention of the manipulations going on. Recent brokers 'STRONG BUY TP $4.80 recommendations starting to look silly if SP continues falling especially that the next few months with Xmas - Easter been PPH's best earnings period to become cash flow positive.
Spooky Fibs yes for sure, we know that, a sentiment indicator? Surely it won't pull back that far, it would be a disaster. I voted in Dec 2017 for PPH in the comp, but I don't hold stocks that are out of favour and killing capital, like this one currently is. So not a holder at present.
Hi everyone,
We released a podcast that discussed Pushpay (along with Catapult ASX:CAT and Dicker Data ASX: DDR) a couple of days ago.
If anyone gives it a listen I would be interested in your take on the thesis: https://soundcloud.com/twmpodcast/th...keys-episode-2 (also available on iTunes and other platforms https://itunes.apple.com/au/podcast/...t/id1441602956)
Best,
Matt
Hi Matt, welcome to the forum and great for owning up (instead of just providing a link about PPH ...).
Re the podcast - I did listen in for something like 5 min with full attention span and than another 10 minutes doing other things in the background. Obviously - I can't comment on the 30 minutes I didn't listen to. Am I right that the whole thing would take more than 45 minutes?
From a positive perspective: the three guys have quite pleasant and interesting sounding voices - well in tune with probably most radio programms (however - I only listen regularly to Radio NZ, everything else would be an accident) and they do discuss next to a lot of time consuming chit chat issues interesting and relevant for investors.
However - I was wondering, who your intended audience is. If it is experienced investors, than yes, I did hear some (two or three?) interesting points - but honestly - the gems are well hidden in a flood of irrelevant noise.
If you are adressing however people who use radio just as background noise, than yes, the noise is fine, but your audience would probaly prefer a bit more music and a bit less information about finance.
Personally I would prefer a much shorter podcast with much more relevant information per time unit. A good podcast can address everyting as long as it does not consume more than 15 minutes .. remember - time is money ...
Anyway - just my 2 cents. Other age groups, cultural backgrounds and genders might have a totally different view. Good luck with whatever your business model is ...
Ah yes - and do I think whether PPH is at an infliction point? I wouldn't have a clue. However - I do have a preconceived view on PPH based on previous fundamental analysis (I am sure there is some stuff in the earlier parts of this thread), and while the SP might in the short term do whatever SP's do ... long term are they IMHO not just risky (due to quality issues I see in board and management) but as well (even when ignoring these risks) still overvalued.
Haha, thank you for your thoughts Black Peter. We might need to make "the gems are well hidden in a flood of irrelevant noise" our new tagline. Podcasts aren't for everyone :)
For those that listen past the 5 minute mark we discuss Pushpay in a fair bit of detail after chatting about inflection points more broadly, and I'd be interested in any thoughts on the thesis.
Interesting, now we all KNOW what the big end of town KNEW ..............
Pushpay is to be added to the MSCI small cap index at the end of the month. Freightways, which is making room for Pushpay in that index having plunged 6 percent on Wednesday when the change was announced.
Hi Ogg,
Thanks for tuning in, and the thoughtful response.
"You could argue that there are 3 inflection points. Buy Pushpay at IPO, buy Pushpay at break even, or buy Pushpay at dividend."
We wouldn't consider an IPO (capital raise) or decision to pay dividends (capital allocation) to be inflection points. A fundamental inflection point is a rapid acceleration in underlying cash flows and performance. And to be super clear, this is talking about fundamental performance, not about price charts.
If that didn't come across in the podcast, I expand on it further here: https://mattjoass.com/2018/11/10/inf...int-investing/
"Can you explain to me why this company is less risky now, then it was at IPO? Other than the fact that it has reached break even, as this does not make it less risky."
Sure, so there are fewer fundamental risks to the business. A company that is self-funding is less risky than one that is burning cash because after break-even the company is no longer dependent on external capital. If capital markets tighten for any reason, a cash-burning company faces potential bankruptcy, whereas a profitable company does not.
If you consider a company that is profitable to be equally risky to one that is losing money I'd be interested to understand your thinking?
"Why would you buy this stock, at this inflection point?"
In brief, in the current half year, operating expenses increased by 2% over the same period a year earlier, while revenue increased 49%. That is extremely strong operating leverage.
Put in different terms, Pushpay added 32 percentage points of profit margin in the past year. The market doesn't give much credit for loss reduction, compared to profit growth. So when the operating leverage causes profit to tip past break-even, I expect the market's perception to shift rapidly.
Pushpay shouldn't pay a dividend for a long time. The company's internal rate of return on reinvested capital is well above their cost of equity capital, so it makes sense to aggressively reinvest.
The U.S. companies you noted are interesting. Groupon and GoPro saw their revenues decline by -6% and -20% respectively over the past year, so aren't a great comparison. Here is how Pushpay sits vs. Twitter and Snap (per data from S&P Capital IQ):
TTM revenue growth:
Twitter: 18%
Snap: 53%
Pushpay: 63%
Price/gross profit:
Twitter: 13x
Snap: 24x
Pushpay: 12x
If Pushpay were to trade on a Snap multiple, it would be very rewarding for shareholders. But that isn't required for the thesis to work out well.
Best,
Matt
For what its worth I'm not going to have a wager on it this time. I think the whole tech and SAAS investment landscape has changed and going into 2019 we will see even more focus on value. Further, growth since I exited last year at over $4 has not impressed. Founder selling out in the manner he did and subsequent shenanigans over he said - she said divorce proceedings was shocking.
Glad to be well out of this stock at $4+ earlier this year. For me, first sign of danger was when customer numbers went from 7,128 as at 30 June 17 to 7,121 as at 30 September 2017.
Trend chart just a sad picture - below all MA's I can think off - and hype generators either out of fuel or moved on. Party over?
[BlackPeter Trend chart just a sad picture - below all MA's I can think off - and hype generators either out of fuel or moved on. Party over?)
I'm still here swimming with the sharks who have been buying but don't always play fair in this up/down BS market. As an investor time changes one's outlook sometimes for better or worse just need to look at some others current 50 - 100 - 200 MA.
TRA MPG FSF EVO FBU HLG SUM ZEL MET HGH
Personally will wait for break-even and Xmas/Easter results.
A nice long-form interview with the CEO Chris Heaslip. Interview is almost 50 mins but worth the listen imo.
https://anchor.fm/stockmarketmovers/...2nbrg/a-a7jrm9
Another promise kept
Cash flow positive December quarter
Processing $5 billion annually is pretty cool ...last year only $3.2 billion
Maybe those ‘outrageously’ high valuations are warranted
http://nzx-prod-s7fsd7f98s.s3-websit...169/293330.pdf
Pushpay achieves cash flow breakeven target, now processing over US$5b
Auckland, New Zealand | Redmond, Washington, USA – 7 January 2019
Pushpay Holdings Limited (NZSX:PPH, ASX:PPH, ‘Pushpay’ or ‘the Company’) the leading payments and engagement provider to the US faith sector, is pleased to announce that it has achieved its target of breakeven on a monthly cash flow basis prior to the end of calendar year 2018. The Company was both earnings before interest, tax, depreciation, amortisation and foreign currency gains/losses (EBITDAF) positive and cash flow positive for the quarter ended 31 December 2018. Looking forward, Pushpay is confident the Company will have positive cash flows on an ongoing basis.
Additionally, Annualised Processing Volume[1] increased from US$3.2 billion as at 30 September 2018 to over US$5.0 billion as at 31 December 2018. Excluding the seasonal high period which falls in the last three weeks of December, Annualised Processing Volume increased to over US$4.0 billion as at 10 December 2018.
Pushpay confirms, that it remains confident it will achieve: its revenue guidance of between US$97.5 million to US$100.5 million for the year ending 31 March 2019; a gross margin percentage exceeding 60% for the six months ending 31 March 2019; and positive EBITDAF for the year to 31 March 2019.
Pushpay’s CEO and Co-Founder, Chris Heaslip said, “We are very pleased to announce that Pushpay has achieved its target, and was both EBITDAF and cash flow positive for the quarter ended 31 December 2018.
“Pushpay’s Annualised Processing Volume increased from US$3.2 billion as at 30 September 2018 to US$5.0 billion over the Christmas period. US$5.0 billion of giving represents a significant amount of good being done in local communities, such as funding for orphanages, food drives, homeless shelters and drug rehabilitation, to name a few causes. This is something we are very proud to be a part of.
“Given the strength of the underlying business, Pushpay is well positioned to capitalise on opportunities to accelerate growth, including potential acquisitions that add significant value to the current business.”
Pushpay’s Independent Chairman, Bruce Gordon said, “Achieving these goals is a significant milestone for the business, which further positions the company for continued growth and the board wishes to take this opportunity to congratulate the team.”
___________________
This is good news from Pushpay. It would have been disastrous for them if they'd missed this target. I hope they continue doing well and watch with interest. Not tempted to re-enter at the moment though.
I was just injecting some realism into this. "Another promise kept" gives the wrong impression in my opinion.
Good they finally met this target after missing previous targets.
Don't suppose there's any chance of the previously promised NASDAQ listing now...
LOL who's cynical now.
Value investing is where its at when the Bear is rampant....any good dog knows that.
GS today NZ12m Price Target: NZ$4.75 UPSIDE 61%
Interestingly, in its release the company states Pushpay is well positioned to capitalise on opportunities to accelerate growth, including potential acquisitions that add significant value to the current business
Great result for holders ..............
Great result? I guess - sure, great they managed to become (at the second or was it the third attempt) cashflow positive, i.e. the share should be worth something. Wondering however how optimistic one needs to be to justify the current in my view hyper inflated share price.
If I take the analysts EPS forecasts and consider the past revenue increases, than even the optimistic Graham formula returns only a value of $1.45 per share.
Beyond me why anybody wants to pay more than $3 for this share. Must be related to the industry ... pay now and collect your promised rewards post mortem.
Nice steady SP increase since the breakeven announcement. Last AXS trade was AUD$3.46 = NZD $3.64.
Fingers crossed we're back over the $4 mark soon
Hmm the tide seems to have turned, wonder why :confused:
Not much as nterest in Push these days but pretty amazing report for Q3
http://nzx-prod-s7fsd7f98s.s3-websit...261/294554.pdf
You mean it is pretty amazing that they stay within the forecasted growthrate? Sure - many other growth companies (PEB anyone) deliver consistently less than they promise (not just sporadically as PPH) - i.e. it always could have been worse and yes, companies which do (from time to time) what they say they do must be better.
Question is - how much of a premium is it worth if they do what they say they do? If I believe the forecasts of the analysts (which seem to turn out correct for this FY, which is good) and put these numbers into the typically optimistic Graham formula, than it returns $1.57 as share worth. Meaning, everybody paying more expects growthrate to accelerate from here. How likely is this?
Admittedly - an investment into the faith industry (by fleezing the flock) might be as well good for the soul ... and so far I haven't figured out how to include this into the standard financial formulas. Must be all good ;);
Did anyone attend the investor briefing today at 11am... I am suspicious to the fact the drop in price happened after that and keen to know.
P.S-ASX didn't help either
Interesting muted market reaction today.......perhaps the market is not convinced by the 'good' results?
Disappointing that the SP always dips after an announcement that they're continuing to meet targets. The Church of the Highlands (as reported by NBR) announcement is great news.
Not just 52K potential new end users, but validation that they're attractive to huge churches and they now have another great name on the client list to attract others.
I agree that this is a great news and no doubt PPH is a great company.
It is just that I am not sure how you can justify the MC of ~$1b with the annual revenue of about $41m and 35% of increase in revenue compared to the same period last year. I would not value them at ~$1b when they are not even making profits.....
Don't know where you're getting annual revenue of $41M from. That was their revenue just in the last quarter alone. The December quarter is seasonally higher (Thanksgiving and Christmas) but ARR run rate today by my calculation is still NZD over $120M. That makes market cap about 7.5X revenue. Pretty good when compared to peers considering that they're now cashflow positive and still growing well.
Hey I'm sorry, was just looking at the figure on their website. Revenue for the recent 6 months was 44m USD which is equivalent to 65m NZD so the revenue for the whole year could become up to 130-150m NZD. This is looking much better but still the current MC still looks quite high to me with the current growth rate.
Just see what happened to GTK recently when they released results....
Craigs have maintained their BUY recommendation and increased TP to $4.60
mmh - not much of a growth share recently - isn't it?
Attachment 10380
just to clarify - PPH is the blue line, the yellowish line is the NZX50 in comparison
Maybe the market starts to realise that it needs more than $100m revenue and the promise of a earnings breakeven to deserve a 1$b marketcap ... even if the revenue CAGR still looks interesting (>100). At the end of the day only the bottom line matters.
With a high growth, negative PE company like this, I prefer to track the Price to Revenue at Margin. By Revenue at Margin I mean applying the gross margin to the revenue per share. I use estimated forward revenue, where possible based on a company's guidance. Recent figures for some NZ companies are:
XRO 31.6
PPH 10.2
IKE 3.2
I cannot find the margin for PLX and PYS but using Price to Revenue, I get
PYS 38.0 (doubling of revenue assumed over the next 12 months)
XRO 26.2
PPH 6.1
PLX 2.3
IKE 2.1
PPH shows similar characteristics to XRO in its earlier years but has reached cashflow positive much more quickly. It is not cheap on the above measures but neither is it overly expensive. The high growth rate is continuing.
PLX and IKE look cheap. PLX has begun returning a profit but I see it risky in terms of competition. IKE is close to being cashflow positive and I really like the way that it has established a niche in USA that others will find hard to break into because of the standard for pole analysis that is being adopted by big players like AT&T and which has been introduced by IKE. PYS stands out as being hopelessly overvalued, even allowing for it to be early stage (I have estimated the revenue doubling after all).
Nice, steady uplift
Taking some profit after 22% lift in SP this last month, so sold down ~5% of my holding.
SP has been falling after each quarterly announcement for the last couple of years.
This one may be different with a solid profit result likely.
Clearly one or more big buyers algo-trading, 14 trades to buy just 4000 shares from me.
Yeah I considered this but I wonder if some of that drop has already been realised over the last 3 months? PPH approach the latest results with a uniquely subdued recent SP history, so I think if there is a fall (not a sure thing) then it will be pretty modest, unless the results are terrible which I dont believe they will be. So I think there are very few other shares with more positive prospects, so Ill sit this one in I think.
50 MAseems to be nearing or crossing over and SP over the 200. So there does seem to be a bit of positive sentiment . Might be time to buy back in ?.
I did buy in with my oz left over fund when it pulled back. next week report will be good...first profit..not loss...so it will be different
Great result...great outlook
https://www.directbroking.co.nz/Dire...spx?id=5027749
Big management changes with change of CEO and some Board changes. Setting up for the next stage !
Slightly confused by their earnings statement. On page 40 of their annual report they claim:
Revenue 98.4m (US$);
Deduct from that third party direct cost (basically the money they pay to the credit card company) of US$ 37.9m leaves US$ 60.5m;
Deduct from that their operating expense of 62.5m leaves a loss of US$ 2 million;
Accountants found some foreign exchange gains (US$ 0.6m) - add them and we still have a loss of US$ 1.4m.
And now comes the magic: Somebody found an income tax benefit of US$20.2m. Just wondering whether IRD really transferred this money to them, but can't find it in the cash flow.
Hmm.
Are they really declaring a potential tax savings in future years (if things go well) as a net profit? I am not an accountant, but wondering whether this is standard accounting practise or just very creative accounting?
Attachment 10526
Smells a bit fishy, doesn't it?
BP ...standard practice (even Comvita did it this year)
Is real but in context of this year’s performance a bit unreal
Ignore it in your trusty spreadsheets
If really interested there’s heaps more explanation in the Annual Report
http://nzx-prod-s7fsd7f98s.s3-websit...235/299484.pdf
Ah yes, found the "deferred tax assets" on their balance sheet. And you are saying even the well trusted Kiwi brand Comvita would do that? Me shudders ...
Anyway, didn't expected a really earnings this year anyway - and still wondering whether NZ$1b is really an appropriate market cap for a company with NZ$140m turnover and no real earnings.
Never mind.
With you BP, I don't understand the approx 20mil of defferd tax
Hi BP, I doubt if you are any older than me but what about believing the figures shown by PPH over the past few years? Even when we are in wheelchairs we can still track listed companies using the fantastic tool called the world wide web and excite our brains over new opportunties.
What's new about using shareholder funds to invest in a growing market? PPH is valued much lower than XRO on most (if not all) measures and in actual fact, I do not use XRO as a reference but place that in a different class of over-excitement while PPH has achieved positive NPAT so much earlier than XRO. However, what about PLX? It is valued as much or more but its revenue is no where near as high or as widespread (and hence not so resilient, even with McDonalds involved).
If you want a low growth, high dividend yield but "safe" investment then can I suggest the electricity generator/retailers? The only thing ramping up their share prices at present is the cut in the OCR by the RBNZ. Notwithstanding, PPH will also gain value from the decline in the exchange rate that we can now expect, because most of its revenues are gained from overseas.
PPH grew its revenue at 40% last year and is predicting 26% for the forthcoming year. Their operating margin increased last year from 55 to 60% and is expected to grow to 63%+ this coming year. I am not too concerned about debating whether tax credits are in or out of the profit declaration but would rather look at the expected growth and whether the company is controlling its expenditure in achieving that growth. Fact is that this company has not only grown its revenue in a dramatic fashion but it is now either NPAT positive or close to it, depending on whether you are prepared to accept the audited financial results or not.
Of course, this is not a company to make the most significant one in your portfolio. It is still a speculative company but is becoming less so as time goes on. However, it is one that shows real kiwi entrepeneurial success on an international market. For it to succeed in the US market, as it is doing, is a real success story.
To date, I have gained 106% on my investment, first made in 2016. I am happy to retain my level of investment since the stock continues to maintain its momentum and the company that I first invested in is a more secure company now. Even the latest announcement of management and Board changes is positive because it shows a Board and main shareholders that think about the future in a realistic manner and are prepared to adapt as the company and its market prospects grow.
PPH has seriously considered establishing a US listing in the recent past but has turned away from that to pursue its future as funded by NZ and AUS investors. Proud as I am as a kiwi, I think it is very likely that PPH will either be bought out by a larger US company or will itself migrate to become a US company. We have seen that happen in the past with successful tech companies with overseas customers that need to keep growing to increase their customer base.
Please keep questioning the results. Those of use who are invested need other opinions to make sure that our spectacles have not become rose tinted.
They obviously believe that there is sufficient 'chance' of using the US$60 million in Losses, Deferred RD etc in the future to now recognise that the Tax Losses have a future value.
With 2019 Year producing a Loss before Tax of US $1.4 million, then future periods would have to reflect even higher profit than 2019 to offset any Losses, but that could take quite a while
SilverBack, this post is pretty much the same as some of the posts in the early days of ATM Many of us were buying in at 20-50 c and having our decisions questioned because the company was burning cash and living on dreams. I am not saying PPH will be another ATM (not currently holding PPH) but the debates are very similar
The debate may sound similar at a surface level but ATM nearly went bust before it went stellar and there is no indication of that with PPH. ATM had to fight the viscious propaganda from Fonterra and PPH has not had to deal with anything like that. PPH is well past the stage of burning cash and living on dreams. For that, you should look at 9 Spokes (9SP.ASX).
PPH is a "tech" stock, which has never applied to ATM. PPH has established itself in a niche market in the USA while ATM's success has been in China in the presence of Chinese distrust of local providers of baby formulas. PPH has met an unfilled aspect of American church "business" and this is not comparable to the ATM experience in China.
The only parallel is as a high growth stock. There are many of these outside of NZ in today's world, especialy in the USA, and so I would look to these with a filter on tech stocks rather than ATM in particular.
I think XRO is a better comparison but PPH has moved to a net profit position much more quickly than XRO even though it is a smaller company.
I guess every share price consists out of a combination of "fundamental value" (i.e. saleable assets + earnings capacity) and market hype.
If the earnings capacity is based on a lot of future growth, market hype typically increases.
I am not questioning that PPH can become profitable (I don't see a future potential taxgain as profit yet), but I don't see the huge future growth rates to justify its current share price.
But absolutely - I might be wrong. Maybe PPH offers something so special that they become the worldwide preferred incasso enterprise for all faith based institutions. In this case they might have the growth rates they need to earn their share price. Maybe though they are in a handful of years just on the rubbish heap of once fledgling payment providers and somebody else took over their market segment.
The odds are against them, but maybe I am just lacking faith ;);
Broker Analyst
GS ..........NEW TP NZ$4.30/A$4.10 (previously NS$3.80/A$3.60)
Mmm, maybe but the ASX is probably more significant these days and are there any AUS brokers giving reviews?
Watch out for US market declines. It is the high growth tech stocks that will be slammed early on. PPH has still not recovered from the hit in the last quarter of 2018. Not only does PPH depend on the US for most of its revenues, it is also an ASX stock and the ASX is driven by the US markets.
Attachment 10531
It seems you don't know what you're really talking about.
Pushpay the big winner at the 2019 Hi-Tech Awards, claiming the PwC Hi-Tech Company of the Year Award.
Well that's the kiss of death.
https://www.nzherald.co.nz/business/ne
ws/article.cfm?c_id=3&objectid=12234053
All quiet here lately
Good news today ....a profit upgrade
That’ll help the share price
http://nzx-prod-s7fsd7f98s.s3-websit...282/301951.pdf
Surprised this hadn't come up yet https://www.nzx.com/announcements/337065
The register will be opened out a bit further with Chris Heaslip's sell-down and I do not see that being a negative. It only amounts to 4.45% of the compay's shares anyway. Chris's influence will still be felt as a Director.
Unless a dodgy co-founder is being kicked out of the company, it is never good looking that co-founders are bailing out.
yeah diversifying your investment is always good. If he is withdrawing his investment from PPH and putting it into somewhere else, wouldn't that mean he is now able to find better growth in other investments than what PPH used to be? It sounds like PPH is now settling its business rather than expanding business for further growth. I sold out a while ago and had this thought since back then.
He must have something in mind,with reserve bank rates being cut willy nilly I can't see anything worth while in the fixed rate markets,perhaps he has been offered a stake in Plexure!
I don't have any problem with what he's doing.
He's been worth $100+M on paper for a while but hasn't had any serious money to spend....
His CEO's salary would have been OK, but not enough to buy the big house, cars, philanthropy or whatever else he's into.
And now he doesn't even have that, just some directors fees.
And PPH isn't going to pay dividends in the near future, so what is he supposed to do?
He can spend and/or invest $40M now. And get some dividends or diversification if he wants to from any investments.
Keeping 60% of his shares still shows huge faith in the company (pun intended)
Well supported and oversubscribed bookbuild, subject to scaling closing successfully, with 12.24 million shares held by Mr Heaslip’s associated interests being sold, at the clearing price of NZ$3.70 per share. Attracting bids from 13 institutional investors across New Zealand, Australia, Hong Kong and the US, as well as strong participation from retail investors.
I would assume this will be very positive and add further liquidity to PPH shares.