Shares in payment technology firm PayPoint (PAY) have jumped 7% to 850p following the release of better-than-expected first half results.
Despite a technical disruption in July which impacted a third of its UK retail network, total revenues were still up 8.7% to £106m in the six months to 30 September. Operating profits rose 4% to £25.5m.
INSTALLATIONS ACCELERATE
Part of the increase is due to the aggressive roll-out of the updated PayPoint One terminals, with installations up by 20% from 8,550 in March to 10,242 by the end of the first half. The company’s target is to have 12,400 terminals installed by March 2019, a 45% increase in just a year.
At the same time the average weekly service fee that shops pay to use PayPoint One is creeping up and is now just over £15, helping to boost total service fee income by 40% to £4.8m in the first half.
New clients like Nisa, Costcutter and Booker, which is trialing the system, will help to drive PayPoint One revenues going forward.
The company is also rolling out its flagship EPoS Pro terminal, launched in January of this year, which the company charges shops £30 a week to use, although its target of having 1,000 terminals installed by year-end looks ambitious.
Bill and mobile top-up payment revenues were roughly flat but more clients have signed up in the first half including challenger bank Monzo which has over a million customers so the outlook is positive.
CAN EBAY TURN TIDE FOR PARCELS?
Less impressive was the Collect+ parcel collection business where volumes fell by 16% to 10m parcels due to lower volumes from partner Yodel.
However, a new carrier partnership with eBay is now live in 2,500 out of 7,000 sites just in time for the key Christmas period.
The UK click and collect market handles 118 million parcels a year and the online retail association IMRG forecasts that this number could double by 2025.
PayPoint also has a small but growing business in Romania which is performing well with revenues up 66% to £36.6m and transactions up 44% to nearly 56 million following the acquisition of Payzone.
Analysts are generally positive on the stock with a majority of Buy recommendations and an average 12-month target of £11.00 which implies upside of around 30% after today’s share-price move.
For income investors, PayPoint has a policy of paying out special dividends. Anyone owning shares as of 7th December will be entitled to a standard interim dividend of 15.6p per share plus a special dividend of 12.2p per share in January.
From next April the company will pay dividends quarterly so from July 2019 income investors will get a regular stream of standard and additional dividends.
