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EML

EML Payment’s Continues To Tumble Surrounding Coronavirus Fears.

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

EML’s Payment (ASX: EML) continues to sell off this morning, disappointing investors who were expecting a rebound in line with a market rallying on the back of retreating COVID-19 epidemic fears. EML Payment’s continued innovation in its products has seen it grow from a small company to a leader in prepaid financial services.

EML

The company has released its half-yearly results which saw them increase revenue to $59.2m (up 25%), furthermore its gross profit margins at 76% (up 3%) and EBITDA of $19.7m (up 42%). These results, however, did not meet investor’s expectations as the share price dropped 13% with the company revising its guidance for revenue and EBITDA. Moreover, the continuous fear around the COVID-19 saw the share price continue to tumble.

EML Payment, over the last year, has seen the company expand into the international market with presences in the European markets. They have recently acquired an Irish fintech Prepaid Financial service which will give them the ability to provide e-wallets, payout programs, and software for transactional banking services. This acquisition will compete with UK’s Monzo and Revolut. However, the deal has been delayed until March or April. But once the deal is complete, these endeavors could result in margin expansion, which would attract a higher earnings multiple from the market and drive a share price re-rate.

In addition, EML Payments partnered with Simon Property Group, a global shopping mall operator, for a multi-year agreement. This deal expands EML Payment’s presence in the US market which in return saw a 26% increase in the company’s gift and incentive gross debit volume (GDV). Gross debit volume is the transaction volume of all the services that EML Payment offers. The partnership only recently launched in January and the GDV only reflects 2 months.

EML Payment has a natural competitive advantage through selective partnerships and acquisitions of companies that help with the company’s operations. As a gift and incentive card business, the company has recently pushed its service into the gaming sector. They have tailored the spending and rewards of customers into a single prepaid card whereby customers can re-spend without the delay of traditional banking channels. This benefits partner by increasing incremental revenue and margins. Some of EML payment’s key partners have international presences such as SportsBets. Bet365, Ladbrokes and many more.



  • Disclaimer:
  • This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
  • (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
  • This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
  • ASR has no position in any of the stocks mentioned.

 

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