Key details from the trading update (20 May 2020):
Investor briefing was released on Wednesday, stock popped 11%. See briefing here (https://asx.api.markitdigital.com/asx-research/1.0/file/2924-02293421-2A1256231?access_token=83ff96335c2d45a094df02a206a39ff4)
EML 'creates secure payments solutions for its customers'
Breaking this presentation down;
- Says it is in a Trillion dollar industry
- 46 contracts signed in the last 2 quarters
- 331 contracts in the pipeline
- Projected $5 billion GDV in 3-4 years
- From 2018 - 2020, retained 99.9% of customers
Where to from here?
IMO, EML is in a good spot, in the technology sector and leading the way into where the world is heading, online/mobile payments.
Diversified its business with the aquisition of PFS, which helped get away from relying on gift cards, now only making up 30% of revenue.
Little customer churn over the last 3 years.
52 week high of $5.70, ran too hard at this point and came off
52 week low of $1.20 in COVID March lows
If they continue to signs contracts, there is no doubt that the share price will run up from here.
Disclaimer: I hold EML in my portfolio
BUY - Intelligent Investor view on EML
EML is a payments technology company, that provides customised paymentsolutions to their B2B clients. Not a one trick pony gift card company, and Ithink that will be evident in the future period as the wider company grows andthe Mall gift card sector 'potentially' shrinks. There is a bit of amisconception out there with what EML does and I think it can be simply puthere;
Now to the results
Option 1 - Total Business Aggregation ($m)
July GDV Performance
July GDV Annualised
GDV to Rev
Underlying Cash Inflow - 70%
EBITDA margins in H2Fy22 had fallen to 21%, with the COVID & PFS impacts on the numbers I wouldreally prefer to wait for a clean set of numbers to see this wash through thefinancials. My baseline EBITDA margins for the business remains at 30%.
Let's face it theimpact on the malls sector was huge. I found some comments suggestion thatMalls GDV was on track to do 1.1b seldom - the G&I segment's actual FY20performance was $1.175b. My assumption here is that maybe $250m in GDV wasimpacted which converts to
The flip side tothis is that
Positive or Negative thoughts around EML?
EML reported their FY21 Q1 Results. Market popped on the Investor Briefing a few days ago but not much from these results, which is interesting. Worth reading this article which breaks down the details for you.
EML Con event coming up. For anyone interested, you can sign up for this event at emlpayments.com.au
8common Announces CardHero Launch Following the Signing of EML Agreement
PFS expressing interest to support the clients of the Wirecard collapse https://www.businesswire.com/news/home/20200626005239/en/ Hopefully a solution can be put in place that can be beneficial for all parties.
Roger Montgomery is also a fan
Monotone CEO gives fair reasoning as to why no guidance for the Christmas period is provided in an ausbiz interview. Whether this is genuine we won't know until later. Given the overly glossy presentation and the slightly hidden negatives in the report, I'm not filled with over confidence, more a slight distrust. Hopefully unfounded.
Having said that, I won't be selling anytime soon and may even add. Eml maybe looking to stabalise the S.P over the coming months with the hope that a good number of their prospects pay off. This may create a less sentiment driven S.P. that could be pushing $4.50 by Feb.
I maybe alone in thinking that this Christmas period could actually be really good for the gift card side of the business. It's the side of the business i like least but i can see it pushing EML forward in the short term. Nervously positive on EML!
Does anyone else have any thoughts on how this business copes with the onslaught of trouble brewing in the retail sector? I'm hoping Christmas renews interest in gift card purchases but other catalysts are out there? It's proving to be a real laggard in a recessionary environment. More so than I would have expected it to be
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.
See attached report for full analysis.
Date of Analysis: 5/3/2020. Idea source: Small cap, Stock screener, (more than 50M shares). Analysis date price: AUD2.65.
Good Stocks Cheap: The price needs to drop -86% to AUD0.36 in order to be cheap.
Growth With Value: The price is cheap and, remaining so, can still move up 271% to AUD9.83.