Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Here is a slide show for predictions of future profits. http://www.earthport.com/investor_day_2016/
Bank of America has been on the books a couple of years and they are supposed to be ramping up the transactions this month.
We already have clients of HSBC and Santander
Let's hope so .......still surprised by the magnitude of the £5m fraud. Have a modest amount in here.....but believe it has a business model to thrive and escalate. If they can crack Asia and then Europe next?
On Monday. crweworld.com/india/trendingnow/news/99943/earthport-receives-rbi-nod-for-outbound-cross-border-payments
Is it going ahead. People are loading up big time. Shame I only have 300 pounds.
To get a 75% divi a year on the current share price would be nice. Another £10k top up from me today.
a chance to get in at comparatively low price
John21 mine was a question. I see good news at the moment and I guess the trend up is predicting a good future? PE to me are not important if the eps is growing
No company ever pays out 100 per cent of profits but if EPO pays out half that's 12.5p which on a p/e of 10 gives us over a quid. We can dream.
Cascudi - Easy squire. That could be construed as ramping. Profits outlook is £125 million If that is paid in dividends could be 25p per share. So what could the sp be?
Back to 50p?
20p not bad start.
Signed up Bank of India.
Start moving
Nice trend and nice volume
The Ceo said banks are now contacting Earthport rather than Earthport having to find contracts with the banks. When the transaction costs come down to between $2 and $3 then volume transactions will get very interesting.
Sp doing well with a very high volume.
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Sounds reasonable. My experience of this stuff in the City was that there tended to be relatively high break even costs due to the initial IT and development costs but once you got to b/e the unit profitability soared. That's assuming you avoided stupid losses like Baydonhill!
Making the process cheaper was my opinion.
Copout In the rns it says they are looking at making the transactions more automated and so should make it a cheaper process.
Great stuff John21. Serious, considered analysis which is most welcome. Well done. One question though - transaction fees in financial services tend to decline due to cheaper IT, competition and higher volume processing. Are you assuming £2.2 per transaction will be stable in future?
More The capital markets day presentation is very useful analysis: http://www.earthport.com/investor_day_2016/ The company is expecting to grow at 40-50% per annum long term. If we take the mid point of its forecasts, in 5 years its revenues will be 50m transactions at c£2.5 = £125m. Its gross margin should be c£90m and its net profit c£37.5m. A low capex, fast growing, high margin business would be on more than 20x in current markets, or £750m or 10x the current valuation. That implies a discount rate of c60% which seems way to high for a business that has proved its model, added significant clients in 4 different market sectors and whose Q1 transactions at 2.3m were more than for the whole of the 2013/4 financial year. A more realistic discount rate would be 30%, which would equate to a £200m market cap now, or c45p per share rising to 58p this time next year. If the company meets its targets as set out in the presentation below, this is where its shares should re rate to.
Excellent post from another board. Quick sense check: The overheads were £25.8, including £2.9m of amortisation - giving a cash overhead of £22.9m. The gross margin is 70%, so to reach cash break even the revenues need to be running at £22.9m/70% = £32.7m. That is revenues up £32.7m/£22.8m or 43%. Transaction numbers grew at 91% in Q1 2016/17 to 2.3m, but revenues only grew at 34%. This seems to be a combination of falling professional income (down 33% last year) and declining revenue per transaction (down from £4.7 to £3.1 last year). If revenue per transaction is to be £2-£3 long term, as per their capital markets day presentation, then transactions need to grow to 10.9m - 16.3m for company to reach cash break even. A growth of 91% for full year would be 12.5m transactions, in bottom half of this range. 91% is equivalent to 17.5% per quarter - which would take Q2 to 2.7m, Q3 to 3.2m and Q4 to 3.7m transactions. Q4 annualised would be 14.8m transactions which would be breakeven if revenue per transaction was £2.2. All in all their forecast of cash break even by Q4 looks credible. If revenues for year grew at 34% to £30.5m - then gross margin at 70% should be at £21.4m, meaning the cash operating loss in 2016/7 would be (£22.9m-£;21.4m = £1.5m). This should mean that their £14m cash reserve should easily get them through to cash break even and profitability, even with further capex. All in all Earthport should look very strong by this time next year and the issue will turn back to what is the right price for a fast growing global payments business with recurring revenues and 70% gross margins?