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Z1P - Zip Co Limited

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Quick thread started on RRE.

ASX-announcement today that it has started its drilling campaign on its Ruby Well prospect. This is located 70km from SFR's Degrussa.

So another cheap 'nearology' play given success of SFR and current drilling campaigns by TLM and ALY.

@ time of the last Dec-09 quarterly, it had cash in the bank of $5.7m. Tight share structure with 70m on issue. At 30 cps, this gives a market cap of $21m.

Other prospects apart from Ruby Well.

On the watchlist.
 

explod

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Re: RRE - Rubianna Resources

Good Plug in the financila review today.

Further drilling results on the Curly's Project expected soon.

Dont' hold but on my watch. If we get a rise off the current consolidation could be worth a punt. Gold price a factor of course.
 

springhill

Make the drill work for YOU
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Re: RRE - Rubianna Resources

MC - $5.6m
SP - 7.8c
Shares - 77m
Options - 14.6m
Cash (end May 2012) A$1.39M

Shareholders
Top 20 ~66%

Board
TERRY SMITH
GORDON DUNBAR
DR STEVE BATTY

RUBY WELL
Reported in accordance with the JORC Code (2004), each of the resources are classified as an Inferred Mineral Resource and comprise:
● Bloodstone Prospect 140,000t @ 2.7g/t Au for approximately 12,000 ounces
● Golden Hope Prospect 86,000t @ 2.1g/t Au for approximately 5,600 ounces
● Ruby Anna Prospect 50,000t @ 1.6g/t Au for approximately 2,400 ounces
•Follow-up drilling at the Bloodstone prospect to further extend known mineralisation.
•Drilling between the Bloodstone, Trafalgar and Ruby Anna East prospects.
•MONETISE THE EXISTING GOLD ASSETS.

NORTH RUBY WELL
● Target Area #1 – Two targets with coincident gold (>50 to 592ppb Au) and copper (102 to >200ppm Cu) anomalism1 have been defined from the infill sampling (200m line spacing & 100m sample spacing). The eastern target covers an area of approximately 700 x 200m and the western target an area of approximately 400 x 200m.
● Target Area #4 – Four NW-SE trending horizons with consistently anomalous Cu (>300ppm) have been delineated from the wide spaced sampling (400m line spacing & 200m sample spacing). Along horizon #1, broad intersections (RWAC0354, 20m@391ppm Cu from 28m to EOH & RWRB02142, 14m@460ppm Cu from surface to EOH) of anomalous Cu have been returned. These four horizons are cut by a series of NE-SW trending faults to define zones A-C.
● Target Areas #2 & 3 – A broad zone (2.0 x 0.8km) of coincident gold (>10ppb Au) and copper (>100ppm Cu) anomalism has been defined. A discrete bedrock source (250 x 100m, ≥100ppb Au) has been identified in addition to verification of the Au-enriched lateritic horizon identified from historic drilling. Due to the wide spaced sampling in this area (400m line spacing & 200m sample spacing), potential remains to identify further significant “bedrock” Au anomalies.
•Continue “interface” geochemistry at the priority Au-Cu targets.
•Ground EM survey(s).
•RC drilling.

KILLARA
•Complete geological mapping and sampling over primary geochemical “soil” target areas.
•Ground EM survey(s).
•RC drilling.

ADDITIONAL PROSPECTS
•Continue the Company’s on-going exploration programmes with a focus on gold and base metal (Cu-Pb-Zn) mineralisation.
•Project assessments leading to acquisitions
 

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On September 14th, 2015, Rubianna Resources Limited (RRE) changed its name and ASX code to Zipmoney Limited (ZML).
 
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We caught up with Larry Diamond, CEO and Co-founder of online lender ZipMoney (ZML), to learn more about the company’s underlying business, its monetisation strategy, ZML’s unfair competitive advantage, the recently announced $100M facility its exciting deal with Victory Park and the catalysts for the stock in 2016.

Click below to watch:

http://www.peakassetmanagement.com....arry-diamond-ceo-and-founder-of-zipmoney-zml/
 

andione1983

Danger Will Robinson, Danger
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Good news report released today.. My 2c this is one to keep an eye on. I cam see this taking off as a form of online payment.
 
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Has anyone had a look at ZML or AFY? I can't get my head around the valuations. ZML has an MC of $170m and a loan book of ~$68m. As far as I can see, this is just a traditional finance company that uses a bit of technology to deliver their product to the end user. It's not a "payments" business, in that it is not just intermediating a payment from A to B and clipping the ticket, rather it is using its own balance sheet to pay A and then collect from B.

As a finance company it funds its loan book through a mix of debt and equity. It's not scaleable in the way a payments business would be, or a tech company usually is. In order to grow it needs ever increasing amounts of debt and, I'm guessing, about 20% equity as security, given the nature of the lending. The only real way it can juice its balance sheet is by getting customers to repay loans more quickly so the capital can be redeployed, or by getting things like arrears and bad debts down.

There seems to be a bit of a land grab going on at the moment with these start-ups trying to capture as many merchants as possible and ramping up lending astonishingly quickly (it's pretty amazing that a company this young, with no profitability on the horizon, has managed to secure $110m securitisation warehouse facility). Anyone want to take a punt on how well these proprietary algorithms work in a recession?

I guess as long as the share price is high, equity is cheap and the economy is doing ok so the music keeps playing, but this looks a very frothy to me. They may get as big as FXL one day, but they're going to need a lot of capital to get to that point.
 
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Has anyone had a look at ZML or AFY? I can't get my head around the valuations. ZML has an MC of $170m and a loan book of ~$68m. As far as I can see, this is just a traditional finance company that uses a bit of technology to deliver their product to the end user. It's not a "payments" business, in that it is not just intermediating a payment from A to B and clipping the ticket, rather it is using its own balance sheet to pay A and then collect from B.

As a finance company it funds its loan book through a mix of debt and equity. It's not scaleable in the way a payments business would be, or a tech company usually is. In order to grow it needs ever increasing amounts of debt and, I'm guessing, about 20% equity as security, given the nature of the lending. The only real way it can juice its balance sheet is by getting customers to repay loans more quickly so the capital can be redeployed, or by getting things like arrears and bad debts down.

There seems to be a bit of a land grab going on at the moment with these start-ups trying to capture as many merchants as possible and ramping up lending astonishingly quickly (it's pretty amazing that a company this young, with no profitability on the horizon, has managed to secure $110m securitisation warehouse facility). Anyone want to take a punt on how well these proprietary algorithms work in a recession?

I guess as long as the share price is high, equity is cheap and the economy is doing ok so the music keeps playing, but this looks a very frothy to me. They may get as big as FXL one day, but they're going to need a lot of capital to get to that point.
Lines up with what I found... I stumbled across AFY during the IPO, as TCH owned a fair share of it. They claim that they don't make money through loans, as they don't charge interest. Instead, what they do is pay the merchant a little less, then wait for the customer to pay the full amount. Either way, they're building a loan book and continually need capital to grow.

Not sure if you've looked at it, but TMP has a similar capital requirement, although in a different sector.

There's definitely demand for the product, but there were a few major issues in my mind:
1) No emphasis at all on credit quality - even if it is an item of a few hundred dollars (or less). What are the long-term credit risk implications or required rates of discount to allow for delinquencies?
On this point, ZML's has this interesting footnote on slide 6 of the MS Investor preso:

"Note: zipMoney’s cost structure is made up of financing costs (expected to be 6% with new facility), data costs (~1%), bad debt expense (booked as ~3%) and corporate overheads"


2) In line with what you said: will they forever tap investors for new capital, add more debt or use profits to feed new loans? Capital intensive either way...

Not really something that attracts me at the current price (TMP is more reasonably priced, but still not to my liking)
 
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There's definitely demand for the product, but there were a few major issues in my mind:
1) No emphasis at all on credit quality - even if it is an item of a few hundred dollars (or less). What are the long-term credit risk implications or required rates of discount to allow for delinquencies?
On this point, ZML's has this interesting footnote on slide 6 of the MS Investor preso:

"Note: zipMoney’s cost structure is made up of financing costs (expected to be 6% with new facility), data costs (~1%), bad debt expense (booked as ~3%) and corporate overheads"

Yeah, it's all blue sky as far as the eye can see. There is demand. It was actually a friend whose online business use ZML that alerted me to it. He reckons it's been very good for his business, a few other people I know who run reasonably large $500m+ revenue retailers have both looked at ZML's product and think it looks pretty good. But no matter how good the product the valuation has to make sense.
 

skc

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Has anyone had a look at ZML or AFY? I can't get my head around the valuations. ZML has an MC of $170m and a loan book of ~$68m. As far as I can see, this is just a traditional finance company that uses a bit of technology to deliver their product to the end user. It's not a "payments" business, in that it is not just intermediating a payment from A to B and clipping the ticket, rather it is using its own balance sheet to pay A and then collect from B.

As a finance company it funds its loan book through a mix of debt and equity. It's not scaleable in the way a payments business would be, or a tech company usually is. In order to grow it needs ever increasing amounts of debt and, I'm guessing, about 20% equity as security, given the nature of the lending. The only real way it can juice its balance sheet is by getting customers to repay loans more quickly so the capital can be redeployed, or by getting things like arrears and bad debts down.
I am guessing you read this article today. http://www.afr.com/business/retail/...to-highlight-christmas-growth-20170114-gtrms9

I can see scale benefits in brand, IT, back office and capital costs... and turning a $1 capital over 6 times in a year (clipping 4% each time as mentioned in the article) is probably not a bad business. It scales more like an online store that holds inventory rather than a payment system as you said. And yes FXL is probably a decent comparable.

AFY's credit check feels like a bit of magic sauce... it asks nothing more than the delivery address, credit/debit card details and email. May be they have some data sharing with the card company? Otherwise it's hard to see how they can have an edge in term of credit.

You can't deny AFY's growth in transactions in such a short time though... they are already at $300m annualised sales, it's not too heroic to see $1-2B in the foreseeable future if they get the physical store implementation right. With share price staying strong the dilution might not be as bad as feared. But yes plenty of things need to go right.

TCH is the actual technology behind AFY as it gets paid processing fee on the value transacted. Yet it's trading on nothing more than it's holding in AFY (TCH holds 50m AFY shares). So either AFY will lose a lot of the value, or TCH is undervalued, or TCH is so $hit that it will just be a cash drain forever (ignoring the fact that it has the technology behind AFY).
 
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Ha! I hadn't seen that. Thanks.

I can see scale benefits in brand, IT, back office and capital costs... and turning a $1 capital over 6 times in a year (clipping 4% each time as mentioned in the article) is probably not a bad business. It scales more like an online store that holds inventory rather than a payment system as you said. And yes FXL is probably a decent comparable.
...
You can't deny AFY's growth in transactions in such a short time though... they are already at $300m annualised sales, it's not too heroic to see $1-2B in the foreseeable future if they get the physical store implementation right. With share price staying strong the dilution might not be as bad as feared. But yes plenty of things need to go right.
Absolutely growth for both has been impressive. That's probably why I'm trying to poke holes in it. Do you think as they keep growing they can maintain turning capital 6x/year at 4%? That'll give them some pretty amazing RoE numbers, in a sector that is very competitive from both upstarts and the existing card cartel/banks. It's hard to see those merchant fees not coming under some pressure. If they can get to $2b in transactions with the same pricing structure I'll be pretty impressed. Even Amex only charge ~2% and merchants don't really like having to accept Amex. A standard Visa/MC is <1% merchant fees and 55 days interest free, and virtually every business on the internet already accepts them.

AFY's credit check feels like a bit of magic sauce... it asks nothing more than the delivery address, credit/debit card details and email. May be they have some data sharing with the card company? Otherwise it's hard to see how they can have an edge in term of credit.
Agree. And no one will really know how good their algorithms are until the sh!t hits the fan. As Klogg pointed out, their presentations are pretty scant on credit quality or methodology.
 
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skc

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Absolutely growth for both has been impressive. That's probably why I'm trying to poke holes in it. Do you think as they keep growing they can maintain turning capital 6x/year at 4%? That'll give them some pretty amazing RoE numbers, in a sector that is very competitive from both upstarts and the existing card cartel/banks. It's hard to see those merchant fees not coming under some pressure. If they can get to $2b in transactions with the same pricing structure I'll be pretty impressed.
I think they will get there. The key benefit for retailer is actually increased basket size. That's not something the existing card providers can claim.

Obviously the increase in basket size can't go on forever... it's a combination of brought forward consumption and higher share of wallet from non-participating merchants. So at this stage it's a no-brainer for a retailer to join up. And $2B is still only a drop in the whole retail world (if you include physical stores) so I can see the pricing structure holding up to that point. Very long term when market penetration is higher and the incremental benefits are no longer that distinct and quantifiable for the retailer, it would have to change then. But then it's a very good problem to have.

Agree. And no one will really know how good their algorithms are until the sh!t hits the fan. As Klogg pointed out, their presentations are pretty scant on credit quality or methodology.
I actually tried to buy a few things using AFY just now. I really can't see how they get information for credit checks... credit card details, delivery address and IP address (I guess). Information gets even more scarce in physical stores. So I am no wiser after trying it out.
 
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And $2B is still only a drop in the whole retail world (if you include physical stores) so I can see the pricing structure holding up to that point.
If there was one player with some IP that gave them a real edge, then yeah I agree. But there's a fair few of them out there who are fighting over a small section of the retail pie. Have a look at the demographics of who uses ZipPay: 20-34 year olds and 78% are female. So we're talking about retail addicts on modest/average incomes who may not qualify for a credit card (still at uni/poor credit etc). These are the easy yards. 90% of the stores ZML have on-boarded seem to be women's fashion. Their loan product has much more balanced demographics.

It will be interesting to see if they can diversify their portfolio of merchants, and move up the chain to an older more balanced male/female ratio, higher value spender who already has a credit card. I have a credit card, as I'm sure you do. I don't think I'd ever use Zippay, would you?

I actually tried to buy a few things using AFY just now. I really can't see how they get information for credit checks... credit card details, delivery address and IP address (I guess). Information gets even more scarce in physical stores. So I am no wiser after trying it out.
My understanding is that when you buy your card is immediately debited the first instalment. This seems to be the most rigorous part of the credit check. ZML seems to have a bit more guts to their checking process. They use FB and "bank transactional data" (how do they get that??) to form a profile of the customer.
 
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Today from my man .. """
I’m pleased to attach a link to an announcement released today from ZML regarding a new financing facility with a Big 4 bank. It appears that certain details are being treated as ‘commercial-in-confidence’ but we can piece together the following – click here for the zipMoney Limited (ZML) funding announcement


  • The amount of the facility is $200m, substantially more than expected. I have been trying to ascertain if this is the largest fin-tech financing deal ever done in Australia … at this stage I am unable to find anything else even close to this magnitude.
  • The interest rate is conspicuously absent from the announcement however they have disclosed that their weighted average cost of capital (WACC) should halve to around 6%. This implies that the rate of the new facility is less than 5% (potentially closer to 4%), an outstanding outcome.
  • The facility should be operational by the fourth quarter (April) at which time 50% of the current Victory Park Capital (VPC) facility balance will be rolled in, thereby reducing interest costs immediately.

Further to the above, ZML announced a $30m increase in the size of the current facility with VPC, to $140m. This should ensure sufficient funding is available until the commencement of the new facility.


Since listing it is fair to say ZML management have been understated in their announcements & presentations to investment markets. In this case then it is worth noting the words of CEO, Larry Diamond, when he says, “This is a transformative step forward for the Company.” I have talked in previous emails about the issue of cash flow breakeven and the timing & effect this would have on the value of the company. It is my view that the attached announcement all but ensures this will not only occur, but do so in coming months.


Should you have any questions please do not hesitate to contact me direct on ""
 

System

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On December 14th, 2017, Zipmoney Limited changed its name to Zip Co Limited.
 

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On January 15th, 2018, Zip Co Limited changed its ASX code from ZML to Z1P.
 
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I am tipping this stock for July stock tipping competition as a potential contender in the Financial Tech industry. Just posted this to comply with new competition rules.
 
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I think it's testing the $1.20 high's and may break to the upside with a bit of momentum. This could be the underdog (Z1P currently around 350m) in the Financial Technology space since Afterpay Touch Group Ltd (APT) has become a huge 4b+ (that's 4 Billion Dollar Market Cap) company which operates a similar payment systems model.
 

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