The market reaction to Paysafe’s (PAYS) half-year results was muted, despite improved revenues, reduced net debt and a “more sustainable level” of performance following “exceptional trading” in 2016. But this reticence was unsurprising, while the more pressing issue for shareholders is the group’s takeover situation. In late July, Paysafe received an offer from a consortium of funds managed by Blackstone and CVC Capital Partners. And, on Friday 4 August, it was announced that an agreement had been reached between the boards of Paysafe and the bidding consortium (‘Bidco’), valuing the company at c. £2.96bn, or 590p a share.
Paysafe’s management has not given full-year guidance due to restrictions placed on them regarding forward-looking statements. That said, these results are strong. The operating margin was maintained at 18.5 per cent, despite salary costs incurred through increased headcount and expenses from the purchase of Merchants’ Choice Payments Solutions. Payments processing saw sales growth of 14 per cent to $264m, “outperforming the overall group” and driven by Asia Gateway. In light of the plan to sell Asia Gateway as part of the offer agreement, management released additional information about this business, which grew revenue 20 per cent and represented c. 23 per cent of Paysafe’s adjusted profit after tax.
Analysts at Barclays forecast pre-tax profits of $305m and EPS of 51¢ for FY2017, up from $242m and 42¢ in 2016. They see upside potential, with the current 590p bid "undervaluing the business".
| PAYSAFE (PAYS) | ||||
| ORD PRICE: | 590p | MARKET VALUE: | £2.86bn | |
| TOUCH: | 589.5-590p | 12-MONTH HIGH: | 601p | LOW: 230p |
| DIVIDEND YIELD: | nil | PE RATIO: | 25 | |
| NET ASSET VALUE: | 271¢* | NET DEBT: | 20% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 487 | 74.6 | 13.0 | nil |
| 2017 | 539 | 89.0 | 15.0 | nil |
| % change | +11 | +19 | +15 | - |
| Ex-div: | nil | |||
| Payment: | nil | |||
Includes intangible assets of $1.6bn, or 329¢ a share £1=$1.3 | ||||
