Why is EML Payments zooming high?

EML Payments Ltd.

EML Details

Significant potential in fast growing market:EML Payments Ltd (ASX: EML), a payments solutions provider of prepaid financial card products and services, witnessed a stock price surge of 5.8% on October 05, 2017 as the group bagged a multi-year agreement with InfoSync Services for B2B virtual payments, through its wholly-owned subsidiary, EML Payments USA. InfoSync is an accounting, payroll and reporting outsourced services’ company that caters to more than 7,500 restaurants in the U.S. Through the new partnership, InfoSync will refer its clients to EML for virtual supplier payments or purchasing card.A unified solution will be offered to the clients as InfoSync plans to integrate EML’s B2B virtual payments and purchasing card solution into its accounting platform. EML plans to launch first of the many programs for InfoSync in the coming months, while terms and timing are still not revealed.

Recently, EML Payments’ wholly-owned subsidiary EML Payments Europe also entered into a multi-year agreement with Betsson Group for the provision of branded reloadable cards that will be used by Betsson customers to immediately access their winnings and remit funds into their gaming account. EML Payments Europe also has a multi-year agreement with Fortuna Entertainment Group in place for the provision of branded reloadable cards. 

Addition of new customers to the base (Source: Company Reports)

EML thus has the capability to help companies in a wide array of industries to seamlessly offer electronic payments. The group’s strength lies in offering prepaid financial products that have strong technological functionalities, and this is helping the group operate well in an expanding market.

In FY17, EML’s Gross Debit Volume (GDV) totalled $4.42bn, reflecting an increase of 348% over the prior year while organic customer acquisition led to a 48% year-on-year GDV growth. FY17 represented a record year performance with EBTDA improving 189% to $14.5m while the group reported for net loss for the year. However, growth is expected to continue with FY18 finding support from a strong pipeline of opportunities across all regions. Further, increasing diversified revenue streams in Australia, with developments in Europe and North America following launch of Reloadable programs in FY17, are signifying good prospects. The group will continue to get a boost from growing popularity of virtual prepaid payment cards and retailer acceptance of card based payments.

The stock has rallied 28.7% in last six months as at October 04, 2017, and is trading at slightly high levels. We give a “Hold” recommendation on the stock at the current price of $2.16


EML Daily Chart (Source: Thomson Reuters)

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