The Smartpay Holdings Ltd (ASX: SMP) share price is up 18% today after the EFTPOS provider released its FY20 results. Smartpay saw a 34% increase in revenue over the year as a result of strong growth in Australia. 

What does Smartpay do? 

Smartpay is the largest independently owned and operated EFTPOS provider in Australasia. Having operating in Australia for nearly 10 years, Smartpay has supplied over 35,000 EFTPOS machines to over 25,000 merchants across Australia and New Zealand. 

Smartpay offers merchants a flat rate for MasterCard, Visa, Alipay, and WeChat pay transactions. Terminal rental fees are waived when merchants process a sufficient value of transactions each month. Merchants are offered a choice of flat rates or automated surcharging so they know charges to expect. 

What did Smartpay report?

Smartpay reported full year revenue of $28.3 million, a 34% increase on FY19. The key driver of revenue growth was strong growth in Australian acquiring revenues, which grew by 275% to $9.5 million. This was a result of a significant increase in the Australian terminal fleet, which grew from 2,200 at the start of the period to more than 4,600 at 31 March 2020. 

Monthly acquiring revenues grew from $0.5 million a month to $1 million a month (pre-COVID). In addition to growth in terminal and transaction numbers, Smartpay also saw a steady increase in gross margin per terminal as it refined its pricing and product mix through the year. 

Earnings before interest tax depreciation and amortisation (EBITDA) grew 15% in FY20 to $7.4 million. The lower EBITDA growth rate compared to revenue represents the investment of additional resources into the Australian business. The company reported a loss after tax of $4.4 million, which was largely attributable to non-cash costs related to the valuation of convertible notes on issue. 

What’s next for Smartpay?

Smartpay reports that the cash impacts of COVID-19 have been largely offset thanks to government assistance packages and reductions in its cost base. Transaction volumes have recovered as restrictions have eased and are back to around 95% of pre-COVID levels in Australia. 

The proposed sale of Smartpay’s NZ business was terminated as a result of COVID-19, leaving the company without the expected capital inflow. As a result, Smartpay conducted a capital raise last month. Funds will be used to pursue the company’s growth strategy and significantly reduce debt. Smartpay is expecting a strong performance in the remaining 3 quarters of the financial year. 

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Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you are looking to invest $500 into the share market, I believe you should be thinking long term.

This is largely because brokerage costs (which are usually around ~$10 a trade) will eat into your profits if you are constantly buying and selling shares.

With that in mind, here are three top ASX shares which I think could be great options for a $500 investment:

Kogan.com Ltd (ASX: KGN)

A first option for that $500 investment could be this growing ecommerce company. I believe Kogan has the potential to grow materially in the local market thanks to the shift to online shopping, which appears to have accelerated because of the pandemic. At present only ~10% of consumer spending is made online, but this is likely to grow materially over the next couple of decades. With this tailwind in its sails and acquisitions in its sights, the future looks bright for Kogan.

Nearmap Ltd (ASX: NEA)

Another ASX share to consider investing $500 into is Nearmap. It is an aerial imagery technology and location data company with operations in the ANZ and North American markets. Although its performance has been a bit shaky over the last 12 months due to customer churn, I remain very confident in its future. This is due to the quality of its software and its strong position in a fragmented market worth an estimated $2.9 billion per year. In addition to this, it has the option to increase its addressable market by expanding into other territories in the future.

Pushpay Holdings Ltd (ASX: PPH)

A third option to consider investing $500 into is this donor management platform provider. Pushpay has been growing its sales at a very strong rate in recent years and look well-positioned to continue this trend in the coming years. The company recently revealed that it is targeting a 50% share of the medium and large church market in the future. This represents a US$1 billion revenue opportunity for Pushpay, which is materially more than the US$127.5 million operating revenue it recorded in FY 2020. I believe it will get there and, thanks to operating leverage, I expect its earnings to grow at an even quicker rate.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I believe investing in ASX shares should be about long-term decisions. I think the best holding period is ‘forever’, if it makes sense to hold that long.

There aren’t many shares on the ASX that I think you could actually commit to holding for many decades.

But there are at least two in my portfolio that I plan to hold until I’m 100:

Share 1: Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) with its portfolio spread across almond orchards, vineyards, macadamias, cattle and cotton.

I like the diversification, it lowers the risks if one particular sector has a tough time. The farms are also spread across different states and climactic conditions. I think the recent drought and fires have shown why it’s important to have farms dotted across the country.

Farmland has been a useful asset for many centuries. I believe it will continue to be a good asset at least until I’m 100.

The ASX share is steadily increasing its cash net rental profit per unit for shareholders, this measure is called adjusted funds from operations (AFFO). In FY18 Rural Funds made 12.7 cents of AFFO per unit, in FY19 AFFO grew to 13.3 cents and in FY20 AFFO is expected to be 13.50 cents.

It’s this AFFO growth that allows management to confidently predict that Rural Funds can grow the distribution by 4% each year. In FY20 Rural Funds is expecting to retain around 20% of its AFFO to re-invest back into its farms. I think a payout ratio of 80% is very healthy for a REIT. 

Investing in productivity improvements is one of the main ways that Rural Funds is growing its AFFO. The tenant gets a better farm after the investment and Rural Funds gets higher rental income with a better valuation for the farm.

Rural Funds has high-quality tenants like Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE) and Olam. Rural Funds has rental indexation built into all of its rental contracts that either have a fixed 2.5% annual increased or it’s linked to CPI inflation, plus market reviews. I think steady income growth is very attractive in the current COVID-19-affected economy.

Share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I think Soul Patts is a great ASX share. It has been listed on the ASX since 1903, it’s one of the oldest Australian businesses around.

I don’t know what the long-term future holds for any particular industry like telecommunications businesses, banks or supermarkets. But an investment house has the flexibility to change its investments time goes on. In theory, Soul Patts should be able to stay relevant to the economy whatever happens in the future as its investments shift to new opportunities.

Soul Patts’ current investment portfolio has an attractive longer-term future in my opinion. Some of its current larger investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM), Palla Pharma Ltd (ASX: PAL), Clover Corporation Limited (ASX: CLV) and Magellan Financial Group Ltd (ASX: MFG).

The management team at Soul Patts invest within the business for the long-term. I think that makes it much easier to think long-term about Soul Patts itself.

The ASX share is progressively becoming more diversified as it invests into new sectors. For example, it recently invested into luxury retirement living and agriculture. Soul Patts is now looking to invest into regional data centres. I like these new target areas. 

I think Soul Patts is capable of producing solid long-term returns. It pays a growing dividend which is funded entirely from the investment income it receives, less the operating expenses. This means all the capital growth of the portfolio is retained inside Soul Patts. The net regular operating cashflow that isn’t paid out can also be re-invested for more long-term growth.

Foolish takeaway

I plan to own both of these shares in my portfolio for an extremely long time to come. I think Soul Patts is the ultimate ultra-long-term ASX share because it’s diversified and it can change its positions over time.

More reading

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, Treasury Wine Estates Limited, and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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