Equity Analysis /
Australia

AU : Zip Co - 3Q21 trading update – US going strong

    Steven Sassine
    Steven Sassine

    Research Associate

    Richard Coles
    Richard Coles

    Financials - Equity Research

    CGS-CIMB
    13 April 2021
    Published by

    Z1P has provided a 3Q21 trading update. Overall it was another strong quarterly performance from Z1P, in our view, highlighted by group revenue (A$114m), merchants (45.3k), and customers (6.4m) all rising 10%-20% on the sequential quarter (+80%-90% on pcp). Quadpay (Z1P’s US business) continues to be the standout performer, while the Australia business result was solid enough, albeit reflecting seasonal trends. We downgrade Z1P FY21F/FY22F EPS by 2%-4% on some minor adjustments to our sales and profit margins forecasts. Our PT is lowered to A$10.92 on our earnings changes. Z1P continues to trade at a significant EV-to-sales multiple discount to APT, and we continue to see upside if Z1P can execute on its strategy of becoming a global payments player.