CABs advantage lies in emerging markets, which has a market size of $2 trillion and CAB’s current market share is estimated to be only 1-2%!14 Mar 2024 09:16
Summary
- CAB Payments is undervalued and trading at a PE of 5 after its recent 72% price decline.
- The company has experienced rapid growth - 79% per year from 2020-2022 and 25% in 2023.
- Their scalable, transparent, and cost effective products have a customer retention rate of 96% and net revenue retention of 150%.
- CAB (Crown Agents Bank) Payments (OTCPK:CABPF) is an undervalued (P/E of 5), rapidly growing (25% YoY), and out of favor (down 72%) global money transfer business hiding within a 191-year-old UK bank.
- Bhairav is one of multiple high profile, and experienced leaders brought in to lead CAB. A few of the others are: Ann Cairns (Chair), Richard Hallett ('CFO'), Joseph Hurley ('CCO'), David Mountain ('CPO'), David Parker ('CIO'), Richo Strydom ('CTO'), Noel Harweth (Director). If these names don’t mean anything to you maybe some of the team’s experiences do: President of international markets at Mastercard, Global Treasurer at Citigroup, CEO of Royal Dutch Shell, Chairman of Deutsche Bank, Director at National Australia Bank, CEO of Travelodge, CFO of Barclays Africa and senior roles at institutions like RBS, Morgan Stanley, Credit Suisse, Bank of America Merrill Lynch, United Nations Migration Agency, and Discover Financial.
- THE EXPERIENCE, NETWORK AND KNOWLEDGE OF THIS BOARD AND EXECUTIVE TEAM IS MORE IN-KIND TO A $100 BILLION DOLLAR LARGE CAP THAN A $250 MILLION DOLLAR MICRO-CAP
- CAB’s management team is aligned with shareholders as they IPO’d with a clean balance sheet, outside of a 7% minority interest
- CAB’s payment and FX products have multiple advantages over the incumbent correspondence banking system that accounts for 80-85% of the cross-border payments occurring today. CAB products are scalable, transparent, fast, and cost less
- If CAB’s product has a durable advantage, they are operating in a market estimated to be $56 - $271 trillion dollars and expanding at 7.3% per year. CABs advantage lies in emerging markets, which has a market size of $2 trillion and CAB’s current market share is estimated to be only 1-2%.
- The current valuation appears low and I expect CAB to re-rate higher if they continue to execute and diversify their geopolitical risk. To put their current price into perspective, it is 1/2 the valuation of regional banks (P/E 10), and 1/8 of their fintech payments brethren Wise (P/E of 45) and Shift4 Payments (P/E of 50). Flywire (FLYW) which is not perfect, but a business to business comparison has an expected 2024 P/E ratio of 123
- How long can CAB continue to hold a P/E of 4-5 when their peers are valued 2-24x more. If the re-rating does not occur through investor demand, CAB could buy back their own shares as they are estimated to cash flow more than £50M in 2024 while growing revenue 20-35%.
Look forward to share buybacks, with the tight free float, low liquidity, should get very interesting 📈
7 days remain, tick tock...
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