Capital growth occurs when share prices to increase in value, and in 2019 we have seen some shares soar to new heights.
Here we take a look at 3 ASX shares that have tripled in value (or more) in 2019.
WISR Ltd (ASX: WZR)
Currently trading at 16 cents per share, Wisr shares are up 400% from 4 cents at the start of the year. Wisr advertises itself as Australia’s first neo-lender and offers personal loans of $5,000 to $60,000 on 3, 5, and 7-year loan terms.
Wisr originated $3.6 million in loans in FY17, $18.1 million in FY18, and $68.9 million in FY19. Wisr’s revenue is predominantly derived from loan establishment fees and management fees from servicing loans sold to third parties.
Operating revenue increased 91% in FY19 to $3.04 million, up from $1.6 million in FY18. Wisr reported a net loss after tax of $7.7 million in FY19, above the net loss of $6.2 million reported in FY18. This was attributed to forward investing in the Wisr ecosystem to position the company for long-term growth.
At the end of November, the company had $10 million in cash and $2.8 million in liquid loan assets. Wisr uses a predominantly capital-light funding model through off balance sheet funding structures, which has allowed the business to scale from a capital allocation perspective.
In FY20, the company is looking to scale. This involves launching a secured vehicle finance product to expand its addressable market and opening B2B2C channels to reach additional customers. New funding opportunities are being pursued to increase debt capacity to fund rapid growth, diversify funding partners and thus risk, and improve overall margins.
In the next 6 months, 4.4 million applications for consumer credit will be made in Australia, according to Equifax. Of those intending to apply for credit in the next 3 months, 53% intended to switch providers. Young consumers are more likely to switch lenders – of the consumers who switched lenders in the last 6 months, 43% were aged 18–34 years, while 32% were aged 35–50 years.
Wisr estimates the consumer lending market is worth $110 billion. Fintech online lending launched in 2014 in Australia and held 0.5% of the market share in 2017, doubling to 1% in 2018. In the US and UK, fintech online lending launched earlier, in 2006. By 2018, fintech online lending held 38% of market share in the US and 25% in the UK. There is potentially scope for a similar take up rate in Australia.
In November, Wisr marked its first $150 million of loans written. The first $50 million took 45 months to write, the second $50 million more than 8 months, and the most recent $50 million less than 6 months. Loan originations have shifted upwards in 2QFY20 – daily loan settlements in November were up 105% compared to the previous year. Wisr is now headed towards hitting a run rate of $150 million originations per year.
Avita Medical Ltd (ASX: AVH)
Avita Medical shares are currently trading at 58 cents, a 612% increase on the 8 cents shares were trading at in January. Avita Medical is a regenerative medicine company specialising in spray-on skin therapy for dermal applications.
Sales of Avita’s lead product, the RECELL System, increased 60% in the September quarter. Total revenue in the September quarter was $7,900,000, an increase of 165% over September 2018 revenues of $2,972,000.
The RECELL System is currently used to treat burn wounds but is also being assessed for use in the treatment of vitiligo, traumatic wounds, scar reconstruction, and for dermatological aesthetic indications. Following approval for use in the United States (US) in September 2018, sales of the RECELL system reached $4,583,000 in the September 2019 quarter.
The company reported that 56 of 132 US burns centres have placed orders for the RECELL System, with $10.8 million in US sales recorded. Avita estimates the US market to represent an opportunity valued at $2 billion. Further potential to use the system for cell-based gene therapy and aesthetics exists.
Japanese regulatory approval for the use of the RECELL System is expected in 2020. In the US, clinical studies will be undertaken using the system in paediatric care, soft-tissue repair, and the treatment of vitiligo. An announcement regarding a collaboration using the system for rejuvenation is expected in 1H20. Capturing just 5% of the skin rejuvenation market could represent a >$500 million opportunity.
In November, Avita raised $120 million in equity capital via a placement of 203,389,831 shares at 59 cents per share. Funds are earmarked for the pipeline development of new indications, including optimising support for clinical trials and development projects, as well as the company’s continued US growth.
New generation products are planned which enhance ease of use and support the adoption of new indications. Generation 2 systems should support office-based procedures and target applications in cell and gene therapy.
Zip Co Ltd (ASX: Z1P)
Zip Co is trading at $3.51, up around 219% from $1.10 at the start of the year. Zip Co operates in the buy-now, pay-later (BNPL) sector offering point-of-sale credit and digital payment services to consumers and merchants.
Zip Co has delivered 100%+ year on year revenue growth for the last 5 years. As at November, Zip Co reported $1.7 billion in annualised volume, 1.6 million customers, 20,000 retail partners, and 45,000 points of acceptance.
Zip Co estimates the addressable payment market is valued at $1 trillion in Australia alone. Zip Co reports that 20% of all e-commerce in Australia isBNPL, while 1 in 2 BNPL users have stopped using their credit cards.
Customer numbers grew 77% in the year to October 2019, with Zip Co boasting a customer retention rate of 97%. Merchant numbers grew 55% in the year to 1Q20, while transactions volumes grew 110% over the same period. Receivables grew 118% to $784 million. New merchants added in November included Amazon, Chemist Warehouse, Optus, and Seafolly.
Zip Co is focused on acquiring prime, near prime and emerging prime borrowers by providing those customers with a revolving line of credit to finance their retail purchases. At 1Q20, Zip Co reported net bad debts of 1.68%, with only 1 in 100 customers late in making payment in any given month, compared to 1 in 6 for credit cards.
Zip Co entered into an agreement to acquire New Zealand-headquartered PartPay in August. The acquisition provides exposure to four key geographies – New Zealand, South Africa, the US, and the UK. The acquisition was completed in November with a full roll out in the UK scheduled for 3QFY20.
In late November, Zip Co announced a capital raising consisting of a non-underwritten $50 million placement to professional and sophisticated investors and a $10 million share purchase plan to existing retail investors. The offer price was $3.70, a 5.6% discount to last close. The placement was oversubscribed, raising $60 million before costs.
Funds from the capital raising will be used to fund expansion in the UK market, expand the product range, including the launch of Zip Biz, increase investment in technology and strengthen Zip Co’s balance sheet.
In FY20, Zip Co is seeking to grow the number of merchant offering Zip online and instore, and drive monthly transactions by customers via the app. Zip Biz, an interest-free digital wallet, is expected to be launched in 3Q20. Zip Biz will provide a revolving line of credit of up to $25,000 with approval in under 3 minutes.
Zip Co expects to reach 2.5 million customers and $2.2 billion in annualised transaction volume by June 2020.
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Returns as of 6th October 2020
Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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