Earlypay increases facility limit in the primary Invoice Finance Warehouse; Shares up on ASX

Key Takeaways:

• Earlypay Limited has increased its facility limit in the primary Invoice Finance Warehouse.
• The increase in the facility limit will support further growth in TTV of AU$1.25 billion.

On 15 March 2022, Earlypay Limited (ASX: EPY) announced an increase in the facility limit in the primary Invoice Finance Warehouse, from AU$125 million to AU$200 million. This increase in the facility limit would aid a continuance of EPY’s strong growth momentum in the core Invoice Finance product.

Australian-based Earlypay Limited provides financing solutions to businesses. It provides products under earlypay equipment, earlypay, and earlypay trade categories. EPY’s invoice finance refers to factoring’ or debtor finance. In this, the client is given an advance payment to a maximum of 80% of their invoice to support the business overcome the cash burden of delivering goods or services in advance of payment from the client up to 30 to 60 days.

The Company believes that the increase in the facility limit will support further growth in the total transaction volume (TTV) of AU$1.25 billion. If this facility is completely used, it would add ~50% growth on TTV projected for FY2022.

Probable reason to increase the Invoice Finance Warehouse limit:

The update related to the increase in facility limit came to post the Company release its half yearly results for the period ended 31 December 2021. In 1H FY2022, the Company’s revenue improved 24% compared to the previous corresponding period due to higher invoice finance volumes. EBITDA increased 29% on pcp. The growth was also driven by organic growth in core Invoice Finance product. Further, the Company noted that its receipt was driven by interest earned on the invoice as well as equipment financing loan books.

Overall, the strong result in 1H FY2022 was driven by the organic growth by interest earned on both the invoice and equipment financing loan books. Also, EPY’s Equipment Finance business improved significantly during the period.

The January 2022 month has performed in advance of hopes as a result of strong trading volume from SME customers along with constant high utilisation rate of Invoice Finance facilities.

Following better than planned H1 results coupled with solid expected January trading, EPY upgraded its FY22 NPATA Guidance from AU$13 million+ to AU$14 million+.

Further, the Company expects a material increase to FY2022 dividend as per EPY’s dividend payment policy of 60% of NPATA.

Stock Information:

EPY shares have delivered YTD return of 9.1954%. On 15 March 2022, EPY shares at AEDT 2:39 PM, EPY shares are trading at AU$0.475, up 1.063% from the previous close. It has a market cap of 133.25 million. 

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