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14 September 2020 | Buy

TYR: An attractive Tech opportunity

BUY  –  Tyro Payments Limited (ASX:TYR)

In the first week of September, Baker Young purchased a modest position in Tyro Payments Limited (TYR).

TYR is an established leader in the Australian payments market. In the past decade, it has become the largest non-bank supplier of EFTPOS terminals and payments software with over 32,000 clients, primarily in the retail, hospitality, and healthcare industries.

Clearly by virtue of having businesses as customers, and particularly those in physical retail and hospitality, means the impact of the COVID-19 restrictions has been significant, however, this also provides substantial recovery potential, and we believe that one of the eventual outcomes of the pandemic will be acceleration towards cashless, contact payments in which TYR leads the way technologically.

It is worth noting, that even amidst the worst of the COVID-19 shutdown, TYR maintained growth, in both customer numbers and transaction value, highlighting the resilience and strength of its offerings, which have also been extended to include online retailing payments systems and associated software.

The company has a pristine balance sheet ($120M in cash, and no debt) providing it both the financial strength to weather an extended period of restrictions, whilst continuing to invest in technology development and other growth initiatives, as well as the ability to consider acquisitions that may expand its position domestically, or even into overseas markets.

After listing at around current prices in November last year ahead of a strong rally, the recent conditions have resulted in a more than 25% decline in TYR’s share price from its February highs, struck in the wake of excellent half-year results, and more recently, they have dropped by around 13% in the past two weeks. We see the current pullback as an opportunity to gain exposure to a technology leader with an established growing market at very attractive levels, ahead of a likely recovery in operating conditions later in 2020 and into 2021.

 

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