EML Payments Ltd

EML Details

Partnered with Fortuna Entertainment Group:EML Payments Ltd (ASX: EML) has announced that its wholly-owned subsidiary EML Payments Europe Ltd has entered into a multi-year agreement with Fortuna Entertainment Group (Fortuna) for the provision of branded reloadable cards that can be used by customers to immediately access their winnings and the ability to remit funds back into their gaming account. Fortuna is the largest betting operator in Central Europe and is regulated in all markets in which it operates.The program is initially expected to launch in the Czech Republic with the potential to expand to other countries in which Fortuna operates. Fortuna initially launched operations in the Czech Republic in 2009 and is market leader in this market. However, the commercial terms and timing of the product launch are not yet disclosed.

For FY17, EML reported robust revenue growth of 149% year on year (yoy) to $58.0 million, driven by both acquisition and organic growth. Gross Debit Volume (GDV) surged up 348% yoy to $4.42 billion during the period. The Group EBTDA grew 189% yoy to $14.5 million and the revenue / GDV metric was cut to 1.3% on the back of a shift in mix from Non-Reloadable products to Reloadable and B2B Virtual Payments which generated $2.49bn of total GDV. The company expects strong growth to continue in FY18 at the back of a pipeline of opportunities across all regions supported by GDV ranging from $7 billion - $8 billion. The stock has moved up 26.5% in the last six months (as on September 17, 2017). The stock initially surged up on September 18, 2017 but settled 1.6% lower post the release of the partnering announcement. Given the shift to non-cash payments and fast-growing markets with a significant potential, we give a “Speculative Buy” on the stock at the current price of $ 1.88

Money3 Corporation Ltd

MNY Details

Bumper FY17 result: Money3 Corporation Ltd (ASX: MNY) edged slightly up (0.35%) on September 18, 2017, while the group posted a strong 44.8% yoy growth in FY17 Net Profit after Tax at $29.1 million over the prior period. Revenue grew 13.3% yoy to $109.6 million and EBITDA grew 43.3% to $50.6 million. Moreover, MNY witnessed 37.4% increase in Gross Loans Receivable to $273.2 million (Secured loans worth $213.9 million, Small Amount Credit Contracts worth $35.2 million & Larger amount longer term unsecured loans worth $24.1 million) during the period. Secured automotive loan receivables have grown 40.9% to $213.9 million, and now represent 78.3% (FY16: 76.3%) of the total gross loans receivable as Money3 continues to focus on growing its share of the secured automotive loan market.


FY17 financial performance; (Source: Company reports)

Larger amount longer-term unsecured loans represent 8.8% of total Gross Loans Receivable (FY16 8.6%), and Small Amount Credit Contract loans represent 12.9% of total Gross Loans Receivable (FY16 14.4%). Importantly, the secured automotive loans underlying business produced a 17.8% increase in EBITDA to $37.1 million, and loan book continues to generate significant and regular cashflows which are reinvested back into growing the automotive loan book and will continue to produce strong EBITDA growth. Given the robust growth across business verticals and expansion in operating margins we give a “Hold” recommendation the stock at the current price of $ 1.45

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