Optimal Payments (OPAY) is maturing into an attractive growth business after its transformational merger with Neovia Financial last year. The combined group now has two major products: an online payments platform and a so-called ‘eWallet’ for internet gamblers. The payments business, in particular, is driving significant growth - leaving the shares set for a rerating.
The figures are flattered by the fact that Neovia only acquired Optimal Payments (taking its name in the process) in February 2011 - so last year includes just five months of revenues from the booming e-commerce business. But chief executive Joel Leonoff says that would only account for about $10m (£6.2m) of the $25m in extra sales clocked this year. Strong demand from existing customers, particularly in Asia, and a couple of contract wins account for the bulk of the growth.
The eWallet product, called Neteller, meanwhile saw its sales shrink from $20.1m to $16.2m. The business was hit by ‘Black Friday’ in April 2011, when the US Department of Justice shut down a number of online poker sites. Mr Leonoff says the regulatory environment is now improving and expects a better second half.
Meanwhile, Optimal swung into profit at the pre-tax level as top-line growth outpaced costs. Citing “high operating leverage”, broker Canaccord expects full-year cash profits of $25m, giving EPS of 10¢ (2011: $17.5m/3¢).
OPTIMAL PAYMENTS (OPAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 86p | MARKET VALUE: | £110m | |
| TOUCH: | 85.5-86p | 12-MONTH HIGH: | 89p | 39p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 55¢* | NET CASH: | $45.3m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 36.9 | -4.12 | -3.00 | nil |
| 2012 | 61.9 | 1.69 | -1.00 | nil |
| % change | +68 | - | -67 | - |
Ex-div: - Payment: - *Includes intangible assets of $61.1m, or 48¢ per share £1=$1.62 | ||||
