Is the FlexiGroup Limited (ASX: FXL) share price worth buying for the Humm update released today?
FlexiGroup offers a range of finaning options for consumers and businesses through a network of retail and business partners. It has buy now, pay later options called Humm, credit cards and consumer & business leasing. It’s been operating in Australia for more than three decades and serves 1.2 million customers.
FlexiGroup’s Humm Update
FlexiGroup boasted that it is winning over retailers with its ‘big things’ buy now pay later option.
Some of its latest wins include Temple & Webster Group Ltd (ASX: TPW), Bing Lee, Betta Electrical, Williams Sonoma, Pottery, Jaycar, Sunboost and 1300 Smiles Limited (ASX: ONT).
FlexiGroup said that retailers are favouring Humm for its differentiated offering, broader demographic and spending power with 2,000 seller locations added since May, which takes the total number of ‘partners’ to 15,000.
Management also claim that Humm is driving higher value sales with an average transaction value of $3,760 with its ‘big things’ wallet and over $400 for ‘little things’ online, which is supposedly around double of other buy now pay later payment types.
In the month following the relaunch of Humm, the total number of transactions increased by 22% and the ‘transaction volume’ went up by 16%.
FlexiGroup CEO Rebecca James said: “Increasing retailer relationships and reinvigorating FlexiGroup brands are core elements of the business strategy for FlexiGroup.
“Key components of the plan also include the right-sizing of the group cost structure, simplifying and modernising IT systems, and marketing – all areas in which increased investment is being made.”
Is FlexiGroup A Buy?
Investors are nowhere near as excited about FlexiGroup as Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), but they don’t have identical business models, so it’s not an exact comparison.
In FlexiGroup’s latest report it showed a 22% fall in its net profit after tax (NPAT) even though customer numbers, transaction numbers and receivables were higher. If growing in the BNPL space turns FlexiGroup around, then it could be a good value buy today, however it may be too early to call that and it’s not the type of business I’d want in my portfolio.
I much prefer the idea of the rapidly growing businesses in the free report below instead.
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