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(ASX: TYR) | TYRO

Jul 28, 2022

Sentiment: Sideways

Type of Trade: Aggressive, High Growth

Industry: Merchant Payment - Banking and Fintech

Sector: Financials, Information Technology

Tyro Payment is an Australian Financial Technology Company engaged in providing routing payments solutions and business banking products to merchants. The Firm mainly caters to small to medium-sized enterprises in the hospitality, retail and health sectors. Nevertheless the company has been expanding to other sectors such as trade, accommodation and services verticals.

Tyro’s value proposition includes extensive industry-specific solutions, ease of integration with Point of sale system, broad acceptance of payment types and a variety of ancillary features. Despite Tyro’s historic focus on in-store sale, it is also building up online gateway to facilitate e-commerce transactions and build out a multichannel payment solution.

✅ Recent Bendigo Bank Alliance is helping the company by boosting $2.5B in transactions processed by Bendigo Merchants.

✅ Although the actual EBTIDA has an actual increased loss of 322% compared to FY21 ($10,897m) hat has already been priced into the current stock price. Nevertheless, such as massive loss increase was most one off costs as result of the non-cash impact of share-based payments expenses, share of losses from associates, expenses associated with the terminal connectivity issue and the IPO and other significant one-off costs.

The adjusted or normalised EBITDA Result by removing these costs would be positive of $2.8 million as it has been showed in the company’s Financial Performance Analysis

✅ $15.8B Record Transaction Processed by Tyro during H1FY22, 31% UP from H1FY21. Property transaction value is very important since the company pull out some commissions from the total value of each transaction. Technically the higher the transaction the higher is the revenue in this transaction.

✅ Continue to increase market share with 4.4% as it record market share of total card payment transaction acquired in Australia.

✅ The acquisition of Medipass – New Health Payments platform with unified health claiming + payments offering should also boost revenue thereby delivering a strategic horizontal integration to the underlying business.

✅ Recently has partnered with Telstra offering merchant acquiring solutions to Tesla’s business Customers in Australia.

✅ Group Statutory Profit of $61.2 Million in H1FY21.

✅ Tyro Connectlive at over 270 merchants – over 1.4 million transactions processed.

✅ 23% Prompted brand awareness (H1 FY21: 17%) – says the company, we have no details how the company record this results, but brand awareness is key to built business value.

✅ 1634% increase in eCommerce transaction value to $255.9 million (H1 FY21: $14.8 million) – This is one of the key attractive for us, putting Tyro side by side to other big operators such as Paypal or Stripe. Although the percentage increase was massive, it is due the recent inception of the service.

Access to fast, flexible funding – Merchants can access immediate funds to help manage cash flow to take on new inventory, new staff, or upgrade the business. This function is one of the key advantages of TYRO over Square for example. Since TYRO holds banking license, merchants can simply go to the app and get the funds already available for them at pre-set fees.

✅ Open Trade results have just been factored and will start to appear on FY2022 full year results, which we estimate strong improve of over 34% from last year.

NSW suffered 115 days of lockdowns therefore contributing by 35% of core Tyro Payments Transaction value.

ACT suffered 64 days of lockdowns therefore contributing by 2% of Tyro Payments Transaction Value.

VICTORIA suffered 73 days of lockdown.

Moving forwards no further we are guessing that no further lockdowns should be recorded, hence absence of lockdowns and the transaction increment by its online gateway, Bendigo partnership Medipass business, should ultimately represent a significant improvement on FY23 results which is what the market will be looking into over the next 3 – 6 months.

🚩 Transaction Cost Increase in the last Financial Report, nevertheless the company is set to increase transaction fees to merchants therefore offsetting future transaction cost squeeze. Although transactions margins has decreased, transaction volumes have outweighed and future transactions should also improve.

Technical Analysis

TYR is currently trading 80% below its last bearish intersection with transaction volume way higher than it was, offering a great buying opportunity at technically fair price.

✅ Bullish Intersection level 2 – confirmed.

✅ Bullish intersection level 1 – to be confirmed

✅ Stock Trading above the EMA 10.

✅ Green Candle on the Heiken Ashi

✅ Strong volume to the upside.

ENTRY DETAILS

Entry at 76-80c

Target BGS 20 – 99c | 30%

Target 2 Long Term – $1.52 | 101%

Weight on Portfolio: 7-10%

Lead Time: 1-3 months.

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