Flexigroup Launches new Products and Produces In Line Fiscal 2019 Results

No-moat Flexigroup’s fair value estimate increases to AUD 1.60 per share, from AUD 1.50 primarily due to the time value of money after in line fiscal 2019 results. The company’s fiscal 2019 underlying net profit after tax, or NPAT, of AUD 76 million was at the lower end of management guidance but consistent with our forecast. However, the fiscal 2019 fully franked dividend of AUD 0.077 per share was modestly above our forecast of AUD 0.070 per share and at the higher end of the company’s dividend payout ratio of between 30% and 40% of underlying NPAT. The key takeaway from the results is the acceleration of new management’s strategy, with the proposed introduction of several new financing products. At our fair value estimate, the company trades on a fiscal 2020 P/E of 8.1 and a dividend yield of 4.8%, and screens as moderately expensive.