EML Payments (EML) shares tank on Irish Regulator
EML Payments (EML) is held in the Emerging Companies Portfolios and fell ~50% this week, we’re now marginally down on this position having been up significantly. The issues relate to “significant regulatory concerns” with their European business called PFS Card Services. The Central Bank of Ireland saying that they have dropped the ball in terms of anti-money laundering and counter terrorism controls. A few outcomes that could play out here: 1. Worst case they lose their licence to operate which would cut earnings by around 45% in FY21 but nearer 30% in outer years. This is unlikely yet it seems the market has priced this in. 2. They close the specific part of the business that has issues taking about a 20% hit to earnings 3. They keep operating but with higher compliance costs, call it a 5% earnings hit. So, uncertainly remains however on an ongoing basis it seems like something in the quantum of 30-35% worst case scenario and ~5% best base. The stock has dropped from $5.10 to ~$3.
