3 Reporting Season Highlights

3 Reporting Season Highlights

22 Mar, 2021 | Stock Insight

Ron Shamgar takes stock after yet another busy reporting season, looks at his portfolio and gives us three brief highlights from the recent results.

Author Ron Shamgar

Reporting season wrapped up on Friday and for us it was mostly a positive set of results. It was worth noting that a feature was companies significantly cutting their overheads and finding more efficient ways to do business in light of covid restrictions. As a result, first half profitability and cash flows were strong and this translated to higher dividend payments which will flow to investors in the next few weeks. Currency was another feature where importers, like retailers, are benefiting from higher gross margins whereas offshore earners are seeing some headwinds.

​For our portfolio, there were three highlights in particular from these results:


EML Payments (EML.ASX) results were in line with analyst expectations and probably disappointed the short sellers betting against the company. Cash flows were incredibly strong and they have $136m to deploy on acquisitions. EML showed investors the diversity and resilience in the business and that it is no longer reliant on gift card sales in shopping malls. The biggest surprise was the pipeline of new business, growing to over 400 programs.

Management quantified win rates of 40%, which is $8bn of new deals every year and should be replicable for the next few years. That is a huge runway of growth on the current $20bn of debit volume they will process this year. Finally, EML is in line to win government stimulus disbursements programs. If announced to the market, this could take the share price closer to our valuation of $6.50 this year.



Resimac (RMC.ASX) is a leading mortgage originator in Australia, delivering an excellent result that the market, in our view, misunderstood. They are currently investing heavily in their digital capabilities and are fully expensing the spend this year. This is why profit after tax wasn’t at the top end of guidance and probably why some investors were disappointed.

For perspective, net profit after tax grew 90% to $51m and full year guidance is $105m net profit after tax. What investors are missing is that guidance doesn’t include any covid provision write back. Something which their competitor, Liberty Financial Group, already wrote back in their half year results. We believe there is an upgrade coming later this half and our valuation is $3.50



​Earlypay (EPY.ASX) is an invoice financing and equipment funding business that has reported their first result as a true fintech. Unlike others in the sector, EPY is actually making real profits and paying dividends to investors. In December, 56% of new business came from their online portal Skipper, which they acquired last year. Already, in January and February, more than 76% of new business is coming from this online channel. Online on-boarding takes two days, compared to the previous system taking two weeks.

We believe that when government stimulus begins to taper off in March, many businesses will require further working capital and think that Earlypay will continue to benefit and continue to grow this year as they pick up some of the slack. We are currently forecasting FY22 net profit after tax of $14m and we value the stock at 70 cents. There is always a possibility that Scottish Pacific or Consolidated Operations Group (COG.ASX) or another player in the finance industry will make a takeover bid for Earlypay.


Disclaimer: EML, RMC and EPY are all currently held in TAMIM portfolios.

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