The Splitit Ltd (ASX: SPT) share price jumped 8% on Tuesday. The entire buy now, pay later sector had a strong day after Zip Co Ltd’s (ASX: Z1P) third quarter update.
Splitit’s new partnership
The buy now, pay later business also reported its own news with a new partnership.
Splitit has announced a new global partnership with UnionPay International, part of China UnionPay, the provider of bank card services and a major card scheme in mainland China.
UnionPay will be integrating Splitit to make it available to its network. This will give UnionPay card holders and those accepting UnionPay the opportunity to utilise Splitit’s instalment payments product.
The UnionPay global acceptance network has expanded to 180 countries and regions, covering over 55 million merchants. Outside the Chinese mainland, UnionPay is accepted at over 32 million chants.
To date, over 9 billion UnionPay cards are issued in 68 countries and regions, among which over 150 million are issued outside of mainland China. All UnionPay credit cardholders will be able to use Splitit’s interest and fee-free instalment payment option at any merchant offering Splitit from June.
How much is this going to be worth?
The economic materiality of the agreement with UnionPay International is unknown due to the contingent nature of results that may be generated. At this point in time, Splitit considers the UnionPay partnership is unlikely to yield a short-term economic benefit for Splitit, however, Splitit considers that the UnionPay partnership supports Splitit’s strategic growth plans.
Management comments
Splitit CEO Brad Paterson said: “The partnership is another significant milestone in Splitit’s Asia Pacific expansion strategy to boost consumer adoption and merchant acceptance. This increased relevance to more cardholders and merchants will, in turn, accelerate our merchant sales volume.”
Summary thoughts
Splitit itself doesn’t know how much growth that this deal is going to generate, so it’s hard to say how much this should help the share price.
Since 8 February 2021, the Splitit share price has fallen 45% since 8 February 2021. Compared to other BNPL operators, the Splitit share price hasn’t been doing well. However, it’s important to keep the valuation in mind – Splitit reported gross revenue of US$8.4 million, which was up 300% year on year. On today’s revenue, the Splitit share price valuation seems very expensive, but the key question is – how much will it grow?
I like the Splitit BNPL model, but there are ASX growth shares that I have my eyes on that are already making good profit.
