EML - EML Payments

[Faramir]

I know just about nothing of EML Payments other than lots of hype on Livewire and that many brokers love it. I have completed just about no research this stock. (Maybe I should start). Not even sure if I am really that interested as this type of business may not interest me? Will it be good long term?
Here is a chart. Later this week, I will try to discuss something more valuable about their pre-paid card system. Why they are attracting lots of clients? What a market darling!
When a company like EML Payments makes successful acquisitions, when is the time to think too late, I missed the boat? Is this a "roll up"? Is that the correct term?
@greggles how did you know back in May this year this trend would continue.

I am choosing this for December 2019 Tipping Competition. Another one of those "if only" stocks.

 

[myrtie100]

I am picking EML as my top pick for the 2020 Yearly Tipping Comp.
The monthly chart shows a successful breakout this year in May.
There is very strong momentum, on rising volume.
I'm hoping this will continue and help propel the price even further for 2020.

 

[Faramir]

The main reason EML is my fourth choice for 2020 Tipping Comp: it polled well in one of my favourite YouTubers. That is a bad reason to pick something but the more I look at EML, the more I suffer FOMO. Another bad reason is that I should have my own conclusion instead of relying on a popularity contest. Running out of time now but I hope I can discuss why EML won the popularity contest in 2019 and why I think it will continue.

 

[Dona Ferentes]

EML will replace Westpac as the payments provider for 49,000 NSW Health workers using salary sacrificing.

FinTech nibbling away

 

[Dona Ferentes]

FinTech nibbling away

From the AFR article:
The NSW Health and Smartgroup deals will lift its salary packaging revenue to around $20 million by 2021. In the 2019 financial year, EML made revenue of $97 million, which is set to increase to $208 million following the integration of Prepaid Financial Services.

The new contract wins show how disrupters are taking on the major banks with better technology. EML offers salary packaging providers and users a better digital experience, including categorising spending and providing accounts in digital wallets with attached loyalty offerings, after banks under-invested in the space.

"Banks are exiting parts of the payments business they consider to be niche to focus on parts that are mainstream," said EML chief executive Tom Cregan. "For them, salary packaging is at the fringe. They have not invested in new technology and are no longer competitive. For us, it is quite the opposite."

Mr Cregan said EML would continue to expand into niche areas of payments. "Salary packaging is one area of specialisation, retail is another, and gaming is another. There are lots of niche verticals globally, and the strategy is to find those verticals and become a larger provider to them."

 

[bigdog]

EML is slowly becoming a household ASX 200 growth stock given its phenomenal 220% share price increase in 2019. The company transitions into 2020 with numerous growth opportunities in salary packaging, instant gift solutions and gaming card solutions.

Did have high today of $5.275 and currently up 6.15%

 

[galumay]

Outside of my wheelhouse, so I have never looked at it in detail, but its an interesting case of the incumbents in inter-party transactions, the big 4 banks, had no interest in adapting when the legislative changes came through. EML was the big winner as a result, basically scooping up mush of the business.

Its now one of the ASX stonks with FOMO driven prices far past any sensible valuation, but thats not to say it cant go a lot higher! I know a couple of investors who both saw and understood the opportunity before the hyperbole took over, they have created significant wealth and I wish I had understood the sector well enough to see the opportunity as well!

 

[Dona Ferentes]

.. know a couple of investors who both saw and understood the opportunity before the hyperbole took over, they have created significant wealth and I wish I had understood the sector well enough to see the opportunity as well!

Know what you mean. I posted (on another site) about an obscure company:

... under a new code, out of a merger between Afterpay Holdings and Touchcorp.
- the group website includes this : Afterpay Touch Group (ATG) https://www.afterpaytouch.com/investor-centre,
- the old code was AFY, and
- ASX website throws up APT : http://www.asx.com.au/asx/share-price-research/company/APT

whatever the case, the SP has a bit of a rocket under it, right now.

that was 14 Sept 2017; S/P sub $5 !! Where's my yacht?

 

[Dona Ferentes]

EML came out with sort of strong numbers, but didn't lift outlook other than revise upward the lower EBITDA number.

Down some 10%

 

[Zaxon]

Down some 10%

Yes, I thought the drop was a bit unnecessary. Down 13.51% for the whole day.

 

[Miner]

Yes, I thought the drop was a bit unnecessary. Down 13.51% for the whole day.

https://www.asx.com.au/asx/share-price-research/company/EML
True - by ordinary means, the result today was an excellent one. Market dived down like any thing. Same reflected on WTC.
Was the stock too high priced as a shadow of After pay
https://www.asx.com.au/asxpdf/20200219/pdf/44f6qvyl0mf9bp.pdf
Motley Fool published lot many things but never said what could be the reason of fall - they are biased because their wealth division heavily backs EML.
https://www.fool.com.au/2020/02/19/why-the-eml-payments-share-price-tumbled-15-lower-today/

 

[Zaxon]

True - by ordinary means, the result today was an excellent one. Market dived down like any thing. Same reflected on WTC.

I think it's a "buy on the rumour, sell on the news" scenario. That's my interpretation of what happened. If that's the case, we should see it start to pick up again shortly.

 

[Country Lad]

EML has renegotiated the terms for the purchase of Prepaid Financial Services (Ireland) Limited

"Upfront enterprise valuation of GBP 131.5 million (AUD 252.3 million1) is reduced by GBP 94.5m from GBP 226m"

Obviously the market likes it and up 50% at the moment.

https://www.asx.com.au/asxpdf/20200331/pdf/44gk8l3wj9lys8.pdf

 

[Dona Ferentes]

I wonder if there is any real value in the acquisition, other than diversifying away from the prepaid card gimmickry into General Purpose Reloadables. That's probably unkind, as it is a move into open banking, with multi-currency offerings. (garlic bread with that?)

Acquisitions can be problematic, the cash burn is contained but they'd better get it right, first time. Meantime, since Feb, has the market not spoken on what was a leveraged play hoping to prise something off the major players?

Don't hold

 

[So_Cynical]

Looks like my week old 1.30 buy order won't get filled....

 

[Faramir]

Yesterday (Monday 30/Mar) it closed $1.87. Open at $2.70, raced up to $3.20 before 'plunging' to a close of $2.30.

I wonder if acquiring PFS Prepaid Financial Services in Ireland is a wise thing. It looks great that EML got a much better price, paying $AUS 159 million upfront from cash reserves. I do not know PFS will go well in Ireland, etc in the coming months with the current fallout. No wonder EML got a better price.

Someone please convince that EML is not a roll up company?? It is great for FOMO situations, I guess now is the opposite. So that is my only reason why it went $3.20 down to a close of $2.30. I guessing let the dust settle before committing to EML. No reason other than to say that I do not understand EML well enough and I am not a day trader. Today would have been a day trader's happy day?

 

[Adamroweco]

so as far as EML is going looking like it might keep going up but has moved in to a sideways motion
growth look's good , simply wall street seem to think
it will grow by 52% and has grown by 271.7% over the last yer
yahoo fiance has it at a Quarterly revenue growth of 25%
and a Total debt of $7.34mil ,, Enterprise value of $860.21M
Enterprise value/revenue 7.88
the trailing P/E is 91.89 and even tho it is overbought i'm thinking it look's like that it has a lot going for it if it can keep growing
but i'm thinking it could still go up but i'm interested to know what other people think ??

 

[Dona Ferentes]

I wonder if there is any real value in the acquisition, other than diversifying away from the prepaid card gimmickry into General Purpose Reloadables. That's probably unkind, as it is a move into open banking, with multi-currency offerings. (garlic bread with that?)

Acquisitions can be problematic, the cash burn is contained but they'd better get it right, first time.

and then there is his quote:

A key risk for EML is its reliance on revenue from breakage, or the unused amount left by consumers on reloadable gift cards. EML can share this with retailers, although it is possible regulators may require unspent funds to be returned to shoppers. EML said breakage continues to fall as a percentage of group revenue, now comprising 23 per cent, down from 33 per cent in FY19, and it is expected to represent a lower percentage of group revenue in FY21 with further growth in the [general purpose reloadable card] segment

now that's a 'leveraged play'

(Don't Hold)

 

[Dona Ferentes]

I know just about nothing of EML Payments other than lots of hype on Livewire and that many brokers love it.

another fundie luvin' it

EML Payments, a local digital-payments business, is one of the largest positions in the Lakehouse Small Companies Fund. EML has flexible technology that allows it to securely channel payments for gift cards, gaming payouts, salary packaging, and payroll, among other use cases.
The business grows with its customers, who rarely leave, and has optionality thanks to fintechs finding new ways to build on top of EML's platform. The company also has a strong, aligned leadership team.

- Joe Magyer, Lakehouse Capital

 

[Boggo]

EML ticking the boxes so far, can it make the $7 area ? (I do hold).

Weekly EW chart.

(click to expand)