Payment technology services specialist SafeCharge (SCH:AIM) skips 3.5% higher to 224p as strong maiden interims spark earnings upgrades. The £324.2 million cap, well placed to play a role in industry consolidation, also pleases with news it is gaining traction outside of its traditional sports betting client base.
Speaking to Shares following impressive maiden half-year figures, chief executive officer (CEO) David Avgi says April's initial public offering (IPO) has given it extra credibility with clients. 'Many of our customers would prefer to work with a listed company rather than a private one,' explains Avgi, 'it is all about transparency.'
Attaining quoted company status was among the key considerations behind the flotation at 162p per share, an IPO raising US$125 million to help fund participation in payments industry consolidation. Avgi says the nature of SafeCharge's work, including connecting clients to banks and collecting money for them, relies on gaining the trust of customers.
The cash-generative company is now attempting to grow its business among video game developers and has also launched a service targeting small and medium-sized businesses. Avgi explains that margins are typically higher in these sectors than those derived from gambling company clients, since SafeCharge is able to offer a wider range of services.
Investors are clearly impressed with the interims, which reveal a 77% revenue advance to $34.4 million in the half-year to 30 June, after the group processed around $4 billion in transactions versus $4.8 billion for the whole of the previous fiscal year. Reflecting SafeCharge's operational gearing, adjusted pre-tax profits surged 465% higher to $9.4 million. Management's confidence is reflected in the early declaration of an interim dividend of 2.88 cents per share (1.8p).
Following these figures, Robin Speakman, analyst at house broker Shore Capital, upgrades his numbers for the second time since the IPO. He now looks for $72 million sales, a further $3 million upwards revision, and upgrades his taxable profits estimate from $20.1 million to $20.4 million, up from $17.4 million at the time of the float.
'We believe that the development of the payment services market is undergoing secular growth, driven by compliance requirements in the payment card industry (PCI),' writes Speakman. 'Accordingly, we expect trading tailwinds to continue to drive further forecast upgrade potential', he adds.