Equity Analysis /

AU : Earlypay - More than just a cog in a wheel

    Scott Murdoch
    Scott Murdoch

    Analyst - Contractors & Developers

    27 August 2022
    Published byCGS-CIMB

    EPY reported underlying NPATA of A14.7m, up 69% on the pcp (slightly below A$15m guidance). A favourable tax rate assisted: NPBT was up 42% on pcp. Solid momentum in invoice finance volumes (run-rating at 17% growth for FY23) should support earnings growth (pre-tax). FY23F EPS is flat given the tax impact. EPY will deliberately slow Equipment Finance volumes (holding the current loan book) to ensure credit risk isn’t heightened in a more uncertain SME environment. We consider EPY’s core offering (invoice financing) as a lower-risk SME product and solid volume momentum has continued. If the group can prove that its technology-led strategy can deliver sustainable client growth, we expect a multiple re-rating to be achieved on a higher earnings base. Add maintained. We see some upside risk to the base investment case from corporate activity, noting COG moved to a ~19.9% shareholding in May-22.