The payments company hosted their AGM this week, with a number of key points coming forward that we believe justifies holding our position in the maligned stock. First and foremost, the Chairman was moved on following investor backlash. While not the sole reason for the underperformance, he, along with the previous CEO, skittled potential takeovers while the business was going backwards. On the operational front, there are signs of life. While regulatory caps remain in place with their reloadable cards business, Gross Debit Volume (GDV) which measures the volume processed through the group still managed to rise 8%. Open Banking has also continued to grow with a monthly revenue run rate of $6m in October, +50% in just 6 months. Higher interest rates are also benefitting income with interest expected to reap an additional ~$10m in FY23, around double vs FY22. While costs are up on the back of additional compliance and regulation, we see plenty of low-hanging fruit in the business to continue to drive growth, and at just, ~15x PE the market isn’t giving it much of a chance.
MM is bullish & frustratingly long EML in the Emerging Companies Portfolio
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