Optimal Payments (OPAY) stunned the City with a stellar first half that had analysts rushing to rework their numbers. A surge in sales far outweighed an increase in costs and underlying cash profit more than doubled to $25.3m (£15.9m). In response, Numis Securities ramped up earnings forecasts by 19 per cent and now expects full-year adjusted pre-tax profit of $37.3m and adjusted EPS of 21.2¢ (from $15.8m and 9¢ in 2012). Yet even that looks conservative given "robust" trading since the period-end.
Revenue at Optimal's smaller Neteller e-wallet business rose almost three-quarters to $28.3m, mostly from European gaming, and it has done even better since June, say management. The big opportunity, however, is in the US, where online gambling is being legalised and regulated state-by state. Nevada was first, but New Jersey, which is expected to make its move as early as November, and California, possibly later next year, are far more lucrative.
Optimal doesn't expect material revenues from these markets this year, but thinks the potential is substantial. That's why it's pumping $12m into the business during the second half alone, hiring 100 extra staff to speed up development, particularly on its mobile services. Revenue at the larger Netbanx online payments division jumped 45 per cent to $89.9m - although Optimal's largest customer now contributes 39 per cent of total fee revenue.
OPTIMAL PAYMENTS (OPAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 255p | MARKET VALUE: | £381m | |
| TOUCH: | 255-257p | 12-MONTH HIGH: | 258p | Low: 79p |
| DIVIDEND YIELD: | nil | PE RATIO: | 53 | |
| NET ASSET VALUE: | 76¢* | NET CASH: | $61.6m** | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 79 | 1.7 | -1.0 | nil |
| 2013 | 118 | 15.5 | 10.0 | nil |
| % change | +50 | +814 | - | - |
*Includes intangible assets of $55.5m, or 37¢ a share **Net of merchant cash £1=$1.59 | ||||
