PayPoint Q1′s and 4BaseBio broker note

Paypoint (PAY.L, FTSE 250 Index. Market Cap £385m, 564p, 1.3% of JIC Portfolio)

Trading update for Q1 ending 30th June

There is a lot of detail for a quarterly statement. It can be read HERE

Conclusion: It looks like a resilient result from Paypoint, and as lockdown is relaxed, each month improved on the previous. I would expect a further recovery in the current quarter and beyond. On current forecasts, the shares are valued at 12.0x the current year ending 31st March 2021. The prospective dividend yield is an attractive 5.6%. In my Video last week, this was one of the six stocks I said I need to address over the next few weeks. I have it as Medium Risk, Medium reward pointing to a 2.0% position for me. There is an argument on the current valuation of raising the Reward to High. In short, I am reassured by today’s update and am not sure why the stock has performed so badly in the last month or so. I think like Venture Life on Monday and SDI yesterday, the shares will recover. I raised a little cash yesterday. I intend to use it taking Paypoint up to target 2.0%. Very Happy Holder!

Main points:

Net revenue fell by £1.9m to £26.8m a year ago. This included £1.1m drop due to the ending of the British Gas contract. So, the underlying reduction was £0.8m on £27.6m = -2.8%.

Majority of PayPoint One, cars and parcel sites have returned to the network.
UK bill payments net revenue increased by 28.2% to £8.2m (Excluding British Gas contract, net revenue decreased by 20.4% and transactions decreased by 25.0%). Consumers made larger payments, less frequently.

Card payments were strong, and it has seen a progressive recovery in transaction volumes from April seen in UK bill payments, UK top-ups, emoney, ATMs and parcels.

In Romania net revenue grew by 8.2% to £3.8m.

It acquired the remaining 50% of Collect+ for £6.0m which should give PayPoint more flexibility in developing the business.

Group net debt at 30th June was £7.3m v £12.0m on 31st March.

The final dividend of 15.6p for the year ended 31st March will be payable in two equal instalments of 7.8p each, payable in July and September.

Nick Wiles, Chief Executive of PayPoint plc, said:
“We have delivered a solid first-quarter performance during a very challenging period for the business and the economy as a whole. Throughout the pandemic, as well as looking after the welfare of our staff we have remained focused on supporting our clients, retailer partner network, and the most vulnerable in the community. I am proud of the way the business has responded to recent challenges, and as we look ahead there is evidence of recovery in activity across a number of our services from the low point in April. We are now working hard to build on these positive signs and identify additional opportunities across our business.”

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4BaseBio AG (4BSB.D. Market Cap ¬£74m, ‚ā¨2.01, 2.1% of JIC Portfolio)

A note from First Berlin explains the investment case and has a ‚ā¨3.30 price target. It can be found¬†HERE


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