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Added 4 months ago

James Eyres in The AFR writes that EML Payments has won a contract to supply payments services to the NSW Health department, part of its strategy to diversify revenue from gift cards and take on banks in niche areas such as salary packaging. The article reports that NAB and ANZ have also pulled back from providing payments services for salary packaging, which has opened the door for specialists such as AccessPay and EML Payments.


A good win for EML and indicates there is going to be increasing opportunity for more such wins going forward.

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#1H20 Results
Added 3 months ago

The payments sector is currently changing in Australia and overseas and EML is amongst it. EML has now de-risked the business With 80% offshore revenue, 85% recurring revenue and strong reporting by all of its verticals in particular VANS and the salary sacrificing segment. Breakage from the cards business is becoming less relative as their verticals grow which is another positive.
EML has the reputation in recent years of beating expectations and reports a conservative outlook. The upwardly revised guidance range appears conservative and Could add further upside especially with the PFS acquisition adding to its earnings. Guidance has been flagged to $39.5m-$42.5m from $38.5m-$42.5m which if conservative a likely 2H beat is coming. Current prices are an opportunity to get into this company with more growth to come.

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#Restructured Acquisition of PF
Last edited 2 months ago

As I thought, EML has restructured it’s proposed acquisition of PFS Financial so it falls in line with the current disruption to Covin-9. The initial acquisition price was $452m plus earnouts over three years. Today the upfront payment of around $252m will be funded by the recent capital raising which left the cash reserves at around $280m.

The acquisition was noted to be completed by the end of this week, with appprovals granted. This new deal will leave EML with cash on hand, nil debt and hence a strong balance sheet after the acquisition, albeit still some downside risk due to the mall side of PFS in Spain and France until we get to the other side of this pandemic.

This will make EML the worlds largest fintech in open banking and prepayments operating in 26 Countries. In the short term there will be price volatility due to the uncertainty of earnings of the business, but in the long term, this will set up EML well for the future. The cash in the bank will help,the business get through the pandemic and allowing it to seek another acquisition or expand the business for future growth.



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Last edited 4 months ago

EML Payments provide prepaid cards (think gift cards). These can be the physical kind, or virtual (to use online) or mobile (for use in company apps).

Also do salary packaging products, allowing companies to provide non-cash benefits to empoyees. And also loyalty programs.

It is essentially a payments processing business. With $30m plus invested into back-end IT infrastructure.

Meaningful regulatory & complaince barriers to entry

Manage 1,100 card programs in 19 countries 

The volume of debit transactions -- Gross Debit Vilume (GDV) -- was up 348% in FY17 and 86% in HY18.

Revenue and EBITDA have been growing very strongly in recent years; up 100% and 135% per annum since 2015.

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#Broker / Analyst Views
Last edited 2 months ago

26-Sep-2019: "Buy Hold Sell: 5 hot small caps on a high"

The five stocks discussed in this particular "BHS" episode have appreciated by an impressive 243% on average over the last 12 months. Returns like this are usually divisive, with investors on both sides of the trade declaring them either structural winners, or overpriced hype stocks. High prices, high expectations, but with them, the chance of high returns.

Will the prices crash like Blackmores? Or are they set for years of outsized returns like CSL?

Of the five stocks discussed (ISX, JIN, EML, PET & APT) the two guest analysts - being Arden Jennings, Co-Portfolio Manager at Ausbil Investment Management, and Robert Miller, Portfolio Manager at NAOS Asset Management - only agree on one of them being a "BUY" - and that one is EML - which is discussed from the 2:44 mark in the video.

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#Bull Case
Last edited 10 hours ago

Amazing insights in the below livewire market outlook. See you all at the $5 party.

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Last edited 4 months ago

A great outline of the business in this presentation here (issued April 2018)


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Added 6 months ago
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