For a specialist service provider like PayPoint (PAY), the accelerated move away from cash payments during the time of coronavirus has had dual effects. ATM transactions and parcel volumes may have contracted sharply, but card payments were up by around three-quarters from the beginning of April through to 17 May. Consumers have become apprehensive about the health threat posed by handling filthy lucre, while transaction volumes have been hit by the enforced closure of non-essential retail stores.
Net revenue from UK bill payments increased by 2.2 per cent to £48.9m, underpinned by rising monetary value per transaction. This helped to offset the 6.4 per cent decrease in transaction volumes, largely a consequence of the cessation of the British Gas contract.
Earnings cover for the dividend has been pitched with a range of 1.2x to 1.5x, which implies a dividend yield of around 5 per cent in the next 12-24 months, according to Canaccord Genuity. The broker has downwardly revised adjusted EPS expectations for March 2021 from 53.2p to 48.1p, against 67.3p in FY2020.
| PAYPOINT (PAY) | ||||
| ORD PRICE: | 746p | MARKET VALUE: | £ 493m | |
| TOUCH: | 744-752p | 12-MONTH HIGH: | 1,158p | LOW: 389p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 44p* | NET DEBT: | 31%** | |
| Year to 31 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 213 | 8.20 | -3.10 | 42.4 |
| 2017 | 212 | 69.1 | 87.5 | 45.0 |
| 2018 | 214 | 52.9 | 63.0 | 45.3 |
| 2019 | 212 | 54.7 | 65.2 | 46.2 |
| 2020 | 213 | 56.8 | 66.9 | 47.2 |
| % change | +1 | +4 | +3 | +2 |
| Ex-div: | † | |||
| Payment: | † | |||
| † Final div of 15.6p to be paid in equal instalments of 7.8p on 27 July 2020 and 28 Sept 2020. Ex-dates of 25 June 2020 and 27 Aug 2020 respectively. * Includes intangible assets of £29.1m, or 44p a share. ** Includes lease liabilities of £0.94m. | ||||
