PayGroup (ASX:PYG) share price rocky following half year results

The PayGroup share price is looking a little rocky today after the payroll and human capital company announced an interim report to the ASX.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The PayGroup Ltd (ASX: PYG) share price is rocky today after the payroll and human capital company announced its half-year results for the six months ended 30 September 2020.

In early trade, PayGroup shares rose 3.49% to 60 cents, before pulling back and losing ground to be in the red by lunch. The company's current market capitalisation is close to $43 million.

About PayGroup

PayGroup is a specialist provider of payroll and human capital management solutions, and is a holding company for brands such as PayAsia, TalentOz, and Astute One.

PayAsia provides software-with-a-service (SwaS) and payroll solutions. It enhances its offer to the market by using a cloud-based human capital management platform called TalentOz. Clients are multinational.

Astute One delivers workforce management solutions for complex businesses, with clients predominantly based in Australia and New Zealand.

PayGroup itself now has staff in 11 countries and services almost 1,000 clients.

Financial reports

In today's report, PayGroup reported revenue for the first half of FY21 of $6.8 million, up a staggering 100% on the second half of FY20. The company stated that this growth was largely driven by organic growth and acquisitions.

PayGroup also reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.6 million, compared to a loss of $1 million in the prior corresponding period. 

Net profit after tax also represents a healthy turnaround for the company, going from a loss of $1.4 million in the prior corresponding period to a profit of $444,000.

Conditions and growth

Although PayGroup noted strong revenue growth and cost efficiencies as key drivers for the financial outcomes, other factors were also at play. It highlighted that JobKeeper also helped ease the burden in Australia, and other government incentives were noted to help in the Asia market.

The company also noted that during the time of the coronavirus pandemic, it continued to drive strong investment in both technology and staff. 

Following a successful capital raise of $3.5 million in September 2020, PayGroup now has a cash balance of $5.2 million. The goal is to use these funds for further company expansion. 

PayGroup has said that the outlook for the second half of FY21 is strong. It is currently completing another acquisition of Payroll HQ, with plans to capitalise on the strongly re-bounding Asia Pacific economies following COVID-19. 

What did management have to say?

In the announcement, PayGroup's managing director Mark Samlal commented on the company's performance:

We have now transitioned our business to become a full-service provider of Human Capital Management and payroll services. This is opening up a significant number of new customer opportunities.

I am very pleased with the financial performance of PayGroup this half as we have reported a profitable period, supported by a strong and growing base of contract revenues. We expect continued growth in contracted sales and earnings as we see the full contribution from our acquisitions and the benefits from our enlarged customer base and addressable markets.

The PayGroup share price

The PayGroup share price recovered well following the March market crash, rebounding from lows of 43 cents to heights of 90 cents in just a few months. However, in the current financial year, the share price has been less than favourable for investors, falling more than 30% in less than 6 months.

Today, PayGroup shares rose immediately on the opening bell, however failed to keep their footing throughout morning trade. The PayGroup share price is currently trading at 58 cents, down 0.86%.

Motley Fool contributor Glenn Leese has no position in any of the stocks mentioned. 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.

More on Share Market News

Man with rocket wings which have flames coming out of them.
Broker Notes

These ASX shares could rise 30% to 50% in 12 months

Big returns could be on the cards for owners of these shares according to analysts.

Read more »

View from below of a man with a shovel standing by a hole he has dug in the garden, with blue sky in the background.
Resources Shares

Here's why I'm steering clear of Core Lithium shares

Lithium has bottomed out over the past year, but here's why this is NOT the bargain stock to buy.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Market News

Why these 4 ASX 200 shares grabbed the Motley Fool's headlines this week

From stellar earnings results to a multi-billion-dollar acquisition approval, these four ASX 200 shares made a big splash this week.

Read more »

A happy older couple relax in a hammock together as they think about enjoying life with a passive income stream.
Investing Strategies

I'd aim to turn a $20,000 savings account into $25,400 of passive income

It doesn't matter if you don't have a pile of cash to start investing. The important thing is to start.

Read more »

A businessman hugs his computer and smiles.
Opinions

3 ASX shares to buy and hold forever

I like these stocks as ultra-long term ideas.

Read more »

A man with grahpics of robot arms, indicating a share price movement in ASX robotics and tech companies
Share Market News

Here's how the ASX 200 market sectors stacked up this week

Tech shares led the pack for a second week, clocking a near 10% gain over the fortnight.

Read more »

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX had a very pleasant end to the trading week this Friday.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
Share Gainers

The Brainchip share price is up 213% this month. Is Nvidia to blame?

The small cap Aussie tech stock is going bananas in 2024.

Read more »