The Information Technology sector has doubled in market cap since the S&P/ASX 200 bottomed in late March 2020. Since 2017, the sector has increased in size fourfold relative to the size of the Australian equity market, yet today only represents 4% of the market by market capitalisation.
Australian Buy Now Pay Later (BNPL) companies are posting some of the highest revenue growth rates in the technology sector globally. We compare the ASX listed BNLP companies to a select group of ultra-high growth companies, that we think will increasingly be the peer set that BNLP companies are benchmarked against. Not only are they priced more cheaply, but they also offer higher prospective growth rates than offshore peers.
Since the March low, the four BNPL stocks collectively added over $A20bn of market capitalisation, with just under 10% of that through new equity raisings. Investors are viewing the sector as a beneficiary of the COVID-19 environment as companies are being able to ‘pull-forward’ new revenue opportunities, coupled with even lower financing costs. The combined impact has the potential to generate even faster rates of revenue growth.
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Written by
John Lockton, Australian Equities
John is a leading investment strategist with 20 years experience.