There are some ASX tech shares that are delivering strong growth each year. They could be worth looking over.
Here are some ideas:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a business that facilitates digital donations, with a major focus on large and medium US churches.
It’s aiming to win market share of around 50% of that sector, which could translate to US$1 billion of annual revenue. Operating revenue went up 53% in the FY21 interim result, which is helping profit margins increase regularly. In that same result, the gross profit margin went up from 65% to 68% and the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin increased from 17% to 31%.
Pushpay’s ChurchStaq offering, which combines the technology of both Pushpay and the acquired Church Community Builder business, is proving very popular with investors.
The ASX tech share has been popular during this difficult COVID-19 period because of social distancing and restrictions. One of the options provided by Pushpay’s tools is a livestreaming service to keep the church connected with the congregation.
Fund manager Ben Griffiths from Eley Griffiths said: “Over the last 12 months it has become clear Pushpay is at an inflection point for both cashflow and earnings. Under the stewardship of CEO Bruce Gordon, Pushpay has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress Ltd (ASX: IRE)). We believe the next few years for Pushpay will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash.”
Betashares Asia Technology Tigers ETF (ASX: ASIA)
This is an exchange-traded fund (ETF) you can buy on the ASX which invests in 50 of the largest largest Asian technology companies outside of Japan.
According to BetaShares, due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector.
Some of its largest positions include names like Samsung, Taiwan Semiconductor Manufacturing, Tencent, Meituan, Alibaba, Pinduoduo and JD.com.
All the businesses are classified as tech, but there are different sectors within that such as a 30.3% allocation to internet and direct marketing, an 18.7% weighting for semiconductors and 16.8% to interactive media and services.
In terms of country allocation just over half of the ETF is invested in ‘Chinese’ businesses, but there’s also representation with Taiwan, South Korea and India.
The management fee of 0.67% hasn’t overly hampered net returns, since inception in September 2018 Betashares Asia Technology Tigers ETF has returned an average of 32.3% per annum.
Kogan.com is a leading e-commerce business in Australia. It sells a wide variety of products and services like TVs, phones, clothes, furniture, sport gear, internet, mobile, insurance and energy. It also has a membership program that allows members to access free shipping and member-only-deals.
Mr Kogan, the founder of the ASX tech share, has spoken about the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”
The company has been demonstrating economies of scale for a while. The EBITDA margin has improved every year over the last four years – it was 4.3% in FY17, 6.3% in FY18, 6.9% in FY19 and 9.3% in FY20.
Kogan.com has also recently announced the acquisition of Mighty Ape in New Zealand which currently specialises in gaming, toys and other entertainment categories. In FY21 Mighty Ape is forecast to generate revenue of $137.7 million and EBITDA of $14.3 million, representing growth for the year of 43.7% and 254.1% respectively.
At the current Kogan.com share price it’s valued at 27x FY23’s estimated earnings.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.