Emerchants Ltd

ASX:EML — Company Profile

Last Close Price (-3.5%)

$1.245

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#8

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CTHD
CTHD
Added 2 months ago


Virtual Pmt card is an important growth aspect in assessing EML's growth prospects. To date, they only signed up partners but haven't achieved substantial volume growth beyond the legacy volume. Encouragingly, I recently got some positive feed back from one of their US partner who commented " fairly easy to onboard. Clients are pleased with the results. "

At abour 1.10, the valuation has been pulled back substantial and could be worth at least a thought as a trade.

Strawman
Strawman
Added a month ago

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

 

Strawman
Strawman
Added 2 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.

Cash balance of $35 million

Strawman
Strawman
Added 2 months ago

At HY18 they were calling for GDV of $6.7 - $7 billion and a 1% conversion to revenue metric.

That's revenue of $68.5 million (at midpoint), which is 18% growth on FY17.

Also called for 75% gross margin, which gives gross profit of $51.4m, up 16% on FY17

Using Pro-rata overhead expenses from HY, EBITDA should be around $20.9m, which is 44% growth
 

UPDATE: EML gave a presentation to Goldman Sachs Small & Mid Cap Conference in April 2018, and offered more sepcific guidance (which aligns with my assumptions above)