Wise PLC

Wise PLC (LON: WISE) is an FTSE Main market stock that provides solutions for international money transfers. It has millions of people held accounts in over 50 currencies.   

The company will release its FY22 results on 28 June 2022.

Investment Rationale for Valuation – Buy at GBX 389.10

• Trading Update: The company posted revenues of £149.8 million in Q3FY22, compared to revenues of £111.9 million in the prior corresponding period. Volume also increased to £20.6 billion in Q3FY22, compared to £15 billion in Q3FY21.
• Uptick in Customers: The company saw 4 million customers making transactions on Wise during Q3FY22. The number of active business customers grew by 39% to 250k during the period, compared to the prior year.
• Fast Payments Mode: The Group’s customers are also benefitted from faster payment mode, thus reflecting the efficiency of operations of the company.
• Technical Indicator: The price of the stock is hovering around the lower Bollinger band with a low 14-day RSI level of ~24.34.  

Key Risks

• Technology Risk: The business model of the company is exposed to the risk of technology obsolescence, and thus it must look to keep up with the changing trends.    
• Competition: There is a high level of competition in the Group’s working space for market share.  

Financial Highlights (for the quarter Q3FY22, as of 19 January 2022)

(Source: Company Website)

• Decline in Customer Price: The company reported a decline in customer price to 0.60% in Q3FY22, from 0.69% in Q3FY21.
• Instant Transfers: Instant transfer witnessed a rise to 45% in Q3FY22, compared to 34% in the prior corresponding period.      

One Year Share Price Chart

(Source: REFINITIV; Analysis done by Kalkine Group)

Valuation Methodology: Price/Earning (FY23E)

*Peers: Peers considered are Eagle Eye Solutions Group PLC, Tungsten Corp PLC and Boku Inc.

*All selected peers are LSE-listed Companies from the Information Technology sector.

Conclusion

The management seems to be quite pleased with its business performance in Q3FY22, backed by impressive growth in revenues and volume.

Based on the decent performance, rise in volumes, growth in customers and support from the valuation as done using the above method, we have given a “Buy” recommendation on Wise PLC at the closing market price of GBX 389.10 (as of April 27, 2022) with lower double-digit upside potential based on 53.74x Price/NTM Earning (approx.) on FY23E earning per share (approx.).

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

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