Investors in the payment solutions space might find themselves stuck between a rock and a hard place at the moment – attracted to the story and growth potential behind the ASX buy-now, pay-later (BNPL) players, but fearful of the sudden change in sentiment and increased focus on valuation occurring in the market.
The Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) share prices have been bruised and battered in the past two weeks, sinking by more than 20%, while smaller players such as Sezzle Inc (ASX: SZL) and Splitit Ltd (ASX: SPT) might be too speculative for some investors.
So, for an investor keen on the BNPL sector, what is the alternative?
Enter, FlexiGroup Limited (ASX: FXL)
FlexiGroup is a diversified financial services group that provides leasing, vendor finance programs, credit cards, lay-by and other finance solutions to consumers and businesses.
FlexiGroup was once a business that consisted of many small businesses and brands, confusing the market with a serious lack of integration and efficiency. It has now undergone a significant transformation, consolidating these 'invisible' brands such as Flexi Rent, Easy Lease, Ezi-Pay, Oxipay and many more into 3 clear propositions that are unique, recognisable brands:
- humm: humm is FlexiGroup's own BNPL platform. This consolidates its Oxipay and Certegy Ezi-Pay businesses. humm continues to see good customer and merchant growth with a total of 18,000 partners and 63,000 new customers added since April (as of August 2019).
- cartt: cartt is a credit card solution designed for the dedicated shopper. Customers can choose to add cartt and enjoy up to 90 days interest free, with options to switch to a 9, 12 or 15 month interest-free instalment plan.
- wiired: wiired addresses the 2.3 million small businesses in Australia and 580,000 in New Zealand that have identified cash flow as their biggest concern. Wiired has two unique product offerings – "wiired lease" and "wiired money". wiired lease is the first digital, integrated leasing platform in Australia that focuses on >$100,000 SME lending. Lease quotes are delivered in real time, and can be tracked and revisited any time, including adding margins and bundling assets from a range of suppliers. wiired money provides up to $30,000 with instant approval.
Foolish takeaway
FlexiGroup trades at a price-to-earnings ratio of just 12.5. It has an existing ecosystem and clients that will allow its new, consolidated products to transition into success.
I believe FlexiGroup exposes investors to the growth potential of a BNPL product, as well as consistent credit, card, consumer leasing and commercial leasing businesses.
It also pays a modest dividend yield of 3.88%.
