Morningstar

Morningstar, Inc.

Equity Bottom-Up

No-moat FlexiGroup’s fair value estimate is unchanged at AUD 1.50 per share despite a potential short-lived boost to financing volumes from recent fiscal and monetary stimulus. We think an ongoing poor macroeconomic backdrop and intensifying competition from digital financing providers will continue to be headwinds. Recent stimulus measures may assist Australian retail sales over the next few months but off a very low base, and we expect any improvements to be temporary. The most recent…

Our fair value estimate for struggling no-moat FlexiGroup remains at AUD 1.50 per share following previously guided to disappointing first-half fiscal 2019 results. New CEO Rebecca James unveiled another strategy to simplify the business and surprised with an AUD 21.5 million placement to Tanarra Capital. A solid performance in its core Cetergy business as well as its New Zealand leasing and new Australian consumer leasing business was not enough to offset the weakness in its Australian and New…

A material downgrade to its fiscal 2019 guidance, combined with continuing macroeconomic and regulatory headwinds drive a reduction in no-moat FlexiGroup Limited’s fair value estimate to AUD 1.50 per share from AUD 2.05. While we had lowered our earnings forecasts for the company in December 2018 in the face of increasing macroeconomic and regulatory headwinds, the company’s new guidance suggests the extent of these headwinds were underestimated. The company’s new guidance is 20% lower than its…

We’ve put our coverage of no-moat FlexiGroup under review while we reassess the company’s near-term financial future and recalibrate our projections in light of continued pressure on the business. We plan to publish an updated fair value estimate within the next week. FlexiGroup lowered its outlook for fiscal 2019 cash NPAT to a range of AUD 76 million to AUD 80 million, sharply below previous guidance of AUD 95 million to AUD 100 million and our AUD 95.1 million forecast. The primary issue…

A deteriorating macroeconomic outlook and a new era of stronger regulatory scrutiny over financial services result in a downgrade in our fair value estimate for no-moat FlexiGroup to AUD 2.05 per share from AUD 2.65. We think the wealth effect of recent house price declines combined with macroeconomic indicators like Australia’s low saving ratio and continuing low wage growth point to lower future retail spending. Although the company’s investments in reducing its operating cost base by AUD 8…

Australia

FlexiGroup provides a diverse range of finance solutions to consumers and business through a network of retail and business partners. This includes buy-now-pay-later products, credit cards and consumer and business leasing across Australia, New Zealand and Ireland.

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