Re: Net 1 Ueps Technologies Inc. (UEPS) - $8.01 0.00 (0.00%) Dec 6, 4:00PM EST
Link to Web site:
I noticed you eliminated this position. I have been looking at it for a small value buy.
For others not familiar w/ the company here is an overview:
UEPS provides payment solutions and transaction processing services for various industries in South Africa, Korea, Europe, and internationally. It offers universal electronic payment system (UEPS), a smart-card based alternative payment system for the unbanked and underbanked populations of developing economies.
According to Yahoo Finance, their financials look pretty good. BV is at $7.89/share ( a lot of this is intangible intellectual assets). Their debt profile is very good w/ 4.8x Net Income = LT debt. Forward PE is 5.8x as long as they maintain South African SSN contract. They are growing revenues by 34% and EPS by even more (Revenue and Fundamental EPS of $123 million and $0.37, a constant currency increase of 34% and 77%, respectively).
Net 1 UEPS crashed 29% after the South African Constitutional Court set aside an appeals-court decision and declared that the process by which the payment-services company got a contract with the South African Social Security Agency was invalid on a constitutional basis. The ruling is a huge setback for Net 1 UEPS, but it's not fatal, as the court will have a hearing in February to determine what it calls a "just and equitable remedy" concerning the situation.
It seems like their business model is sound and profitable and there could be a reversal to the decision in February regarding their South African contract.
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Link to 2013 presentation:
From their February 2013 presentation:
Leading provider of alternate payment systems in emerging, cash-based economies with significant unbanked or under-banked populations
Over 25 million cardholders across more than 10 countries
Leading transaction processor in South Africa, Korea, Ghana and Iraq
• United States: MetroPCS launched Fiscal 2011
• Mexico: Banamex expected launch in Spring 2012
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They do have one customer (South Africa Gov) that accounts for 45% of their revenues. However, slowly other regions/customers are growing as a percentage of their total revenues.
The other value proposition that could benefit earnings going forward are a possible reduction of currency exchange losses due to the strong U.S. dollar. If/when the FED begins to taper and eventually rates increase, the $US should get weaker (relative to the other currencies they use) reducing the losses that UEPS has booked the last few quarters.
I am considering a small speculative buy especially w/ the recent sell off due to the pending court litigation.
Any other Pros and/or Cons to consider?
EKS |
