• HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT
Tamim Asset Management
  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT

Stock Insights

A Surging Virus, Wirecard & The Over-Profitable - Opportunities Are Appearing

30/6/2020

0 Comments

 
This week we take a look at some of our current (and former) portfolio holdings and the impact recent developments both here and overseas have had on their prospects going forward, we see potential as future opportunities for investors.
PictureAuthor: Ron Shamgar
US Virus Outbreak/Surge

The US Covid-19 outbreak has, in the last few weeks, accelerated again and seen record new case numbers reported in the last few days. On Saturday alone, over 40,000 new cases were reported. This takes the total (official) cases since this started to 2.5m. The recent surges are being experienced primarily in the southern states of California, Arizona, Nevada, Florida and Texas. 

Several of these states are now pulling back on their reopening plans, in some cases reinstating shutdowns for bars and other venues. Although we don’t see lockdowns being reinstated in full, it is our job to look for opportunities and we do think this trend is a positive for both Pushpay Holdings (PPH.ASX) and Marley Spoon (MMM.ASX).

Picture
PPH is a payment company enabling mobile app donations to the faith giving sector in the US. The business services over 10,000 churches and has seen a marked increase in take up as church goers stay home but still wish to connect and support their local community church. A recent profit upgrade by PPH reaffirms this trend with $74m EBITDA guidance for FY21. We expect the company to continue to grow, benefiting from this structural shift, and exceed $110m in EBITDA within two years. Given this, we think the stock could be worth in excess of $10.00.

Marley Spoon (MMM) is an online meal kit subscription business enabling consumers to order fresh ingredients according to easy to make recipes and portions to cook at home. We already saw the company benefit immensely during the lockdown period as people stayed at home and took up their services. Since then there were some concerns that growth could taper off as restrictions eased. The recent local outbreaks and the company having good exposure to the surging US market plays neatly into their outlook for at least this year. We expect a strong and profitable quarterly update in the next couple of weeks. MMM is currently trading at about half the revenue multiple of their larger peer, Hellofresh.

Wirecard’s Collapse Creates an Opportunity

Last week one of the world’s largest payment companies and a DAX top 30 German listed stock, Wirecard, was found to be trading fraudulently. Their CEO was arrested, and the business was placed into administration. The news rocked the fintech industry across Europe and the US. 
​For perspective: Wirecard reported (in Euros) about $2.8bn revenue and $800m EBITDA in CY2019.
Over the weekend the UK financial regulator has suspended the accounts of many of Wirecard’s digital banking customers (Pockit, Curve, Anna Money, among others) in order to protect customer funds. This has seen these providers scrambling to look for alternative and credible issuers to manage their customer programs. We believe EML Payments (EML.ASX), through its acquisition of PFS, could benefit immensely from this monumental customer churn event. Our estimates and analysis indicate an opportunity of up to $50m of revenue for EML is up for grabs in the next few months. Watch this space, execution will be key. We value EML at over $4.00.
Picture
Too Profitable? There’s a Downside

Lastly, this week Jumbo Interactive (JIN.ASX) updated the market on a renegotiated lottery ticket reseller agreement with Tabcorp (TAH.ASX). The agreement, due to expire in 2023, will now be extended to 2030 for a one-off fee of $15m. Unfortunately, the new agreement incorporates a new service fee that will phase in gradually from FY21 to FY24 and will see JIN pay an additional 4.65% of its lottery ticket sales back to TAH. We estimate this to represent a revenue hit of $28m by 2023, all lost profit for JIN.

For JIN holders this agreement is bittersweet news. It secured longevity but gives away significant margin. We wrote about JIN previously and took our position at around $9.00 about three months ago as we saw online lotteries to be a pure beneficiary from the unfolding Covid-19 situation. The stock then appreciated to $14.00 and we sold down the vast majority of our holding as our valuation of $13.00+ was exceeded. The recent update indicates that the trend toward online lotteries continues to accelerate. But, with JIN being too good at doing so and earning close to 60% EBITDA margins, it was probably never sustainable selling a product that is licensed to someone else. 

Over time we expect the charity lottery business here and overseas to diversify sales away from Tabcorp. With the shift to online lotto sales only growing, we still see profits growing but at a lower rate, as the phased in service fee kicks in over time. We will continue to monitor JIN and potentially look for an opportunity to re-enter the stock as investor sentiment and enthusiasm inevitably dampens.

0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Stock Commentary

    At TAMIM we are committed to educating investors on how best to manage their retirement futures.

    Sign up to receive our weekly newsletter:

    * indicates required

    TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.

    Archives

    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    December 2015

    Categories

    All
    2016 Presidential Election
    5G
    AGM Season
    Apple (AAPL.NASDAQ)
    Asia Small Companies
    ASX
    ATL.AX
    Aus Equity All Cap Portfolio
    Aus Equity All Cap Value Portfolio
    Aus Equity Growth Portfolio
    Aus Equity Income Portfolio
    Aus Equity Small Cap Portfolio
    Australian Stocks
    Autonomous Vehicles
    Big Four Banks
    Brexit
    Electric Vehicles
    Emerging Markets
    Energy
    ENN.AX
    FAANG
    Financials
    Fintech
    Global Equity High Conviction Portfolio
    Global Mobility
    Gmg.ax
    Gold
    Growth Stocks
    Guy Carson
    Healthcare
    Income Investing
    Infrastructure
    International Stocks
    Investment Thematics
    IT Services
    Mergers & Acquisitions
    Mobility
    Pharma
    Property
    Rare Earths
    REITs
    Reporting Season
    Retail
    Robert Swift
    Ron Shamgar
    SLK.AX
    Small Cap Income Portfolio
    Small Caps
    Stock Report
    Takeovers
    Technology
    Telco Stocks
    Telstra (TLS.ASX)
    Tourism
    TPG
    Utilities
    Value Investing
    Video
    Wesfarmers (WES.ASX)

    RSS Feed

TAMIM | Equities | Property | Credit
​

TAMIM Fund
Australia All Cap
Australia Small Cap Income
Global Mobility
Global High Conviction
Credit

Listed Property
TAMIM Property
Company
About
Contact
Insights
Invest Online
Login
Other
Privacy Policy
Terms & 
Conditions
​Disclaimer
Contact
Level 4, 55 Grafton Street
Bondi Junction, Sydney NSW, 2022

1300 750 007

ima@tamim.com.au

DISCLAIMER

​The information provided on this website should not be considered financial or investment advice and is general information intended only for wholesale clients ( as defined in the Corporations Act). If you are not a wholesale client, you should exit the website. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions. Where the website refers to a particular financial product, you should obtain a copy of the relevant product services guide or offer document for wholesale investors before making any decision in relation to the product. Investment returns are not guaranteed as all investments carry some risk. The value of an investment may rise or fall with the changes in the market. Past performance is no guarantee of future performance. This statement relates to any claims made regarding past performance of any Tamim (or associated companies) products. Tamim does not guarantee the accuracy of any information in this website, including information provided by third parties. Information can change without notice and Tamim will endeavour to update this website as soon as practicable after changes. Tamim Funds Management Pty Limited and CTSP Funds Management Pty Ltd trading as Tamim Asset Management and its related entities do not accept responsibility for any inaccuracy or any actions taken in reliance upon this advice. All information provided on this website is correct at the time of writing and is subject to change due to changes in legislation. Please contact Tamim if you wish to confirm the currency of any information on the website.  

magellen, kosec, clime, wilson, wam, montgomery, platinum, commsec, caledonia, pengana, tamim

  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT