EML Payments Limited

EML Details

Positive Outlook:EML Payments Limited (ASX: EML) is a growing ASX listed FinTech company focussed on enhancing their brand partners by offering innovative accessible prepaid programs. EML has international presence across US, UK, Australia, Europe and Canada, and the recent news about legalizing betting on sports by the US Supreme Court will help the group in terms of profitability as it provides payment technology solutions for payouts, gifts, incentives, and rewards. Primarily, EML helps its partners like Sportsbet and CrownBet to drive loyalty while customers access their funds through the EML platform.

Currently, the group is managing approximately 1,100 card programs in 19 countries which represents the strong presence in the international market. Recently, the company launched its pioneer program that merges points, loyalty, rewards, gifts and payments into mobile app and a single card which drives the consumer engagement and ensures ongoing relevance. Further, the management believes to invest in growth verticals through product and technology innovation which creates future opportunities for the businesses. On the financial front, the group recorded gross debit volume (GDV) CAGR growth of 114% over the period of 1HFY14-18 at the back of organic and inorganic growth. Revenue and EBITDA recorded significant growth at CAGR of 74% and 259%, respectively, during the same period. In addition to strong organic growth, the group has signed several new business partnerships that will be accretive to FY19 and beyond.


Five Year Financial Highlights (Source: Company Reports)

Recently, the group has issued 130,000 fully paid ordinary shares to raise the capital of the company upon the exercise of 130,000 options which are held by certain employees of the Company’s UK/EU business. These options are a part of package of 500,000 options issued in 2015 as part of the terms of the acquisition of the UK/EU business and were subject to certain vesting conditions which have now been satisfied. The remaining options in the same class have also been vested and may be exercised into shares at the election of the holder at any time prior to their expiry on 30 June 2018. On the other hand, new gaming program launched in Europe is likely to be delayed from Q4FY18 to Q1FY19 due to preparation and planning for the 2018 Soccer World Cup. Further, we expect that the revenue to GDV conversion metric will remain strong and will achieve approximately 100 bps for full year. Gross margin is expected to stay steady at approximately 75% over the full year. Meanwhile, the stock price was down by 38.8 per cent in past six months and recovered around 13.85 per cent in past one month with 11.44 per cent rise in the past five days alone, as at May 15, 2018. Hence, we continue to maintain our positive outlook on the stock and reiterate “Buy” recommendation at the current market price of $ 1.31, considering the financials along with organic and inorganic growth prospects of the company.

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