• HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT
Tamim Asset Management
  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT

Stock Insights

Paying Attention to Payments | 3 Stocks To Watch

11/2/2020

0 Comments

 
Ron Shamgar, Head of Australian Equities at TAMIM Asset Management, takes a look at three stocks in one of his favourite market segments right now.

A sector we currently favour is the payments industry both domestically and on a global scale. Consumers are moving away from using cash and cheques with card and mobile payments taking over instead. Cards are now the most frequently used payment method in Australia along with many developed countries around the world.
Picture
Australians made ten billion card payments for a total transaction value of $678 billion during 2019.  According to RBA data, the number of card transactions have increased by about 10% every year for the last decade. We only see that trend continuing into the foreseeable future. 

We see consolidation of the sector accelerating globally and we have positioned our portfolio within the space accordingly. Our preferred picks for 2020 and beyond are Smartpay Holdings (SMP.ASX), Tyro Payments (TYR.ASX) and EML Payments (EML.ASX).

Picture
Smartpay (SMP) is a merchant payments business with a market leading position in NZ when it comes to merchant EFTPOS terminals (20% market share of terminals). It also has a fast-growing Australian merchant acquiring business that is currently annualising $14m of recurring revenue which we estimate will be growing between 50-70% p.a. for the next three years. SMP recently received an offer of $70m from Verifone for its NZ assets (which, at the time, was double the then market valuation).

We view this asset in NZ as extremely strategic and we expect market dynamics and structure to eventually force a bidding war. To recap, all card transactions in NZ go through two switch providers in Paymark (acquired by Ingenico for $190m in 2018) and Eftpos NZ (owned by Verifone). Currently, SMP routes transactions through Paymark which is by far the largest switch provider in the NZ market. We believe Ingenico is incentivised to counter bid for SMP’s NZ business and protect the value of their recent acquisition. Ironically, Ingenico itself is under a takeover offer so, as they say, watch this space. We value SMP in excess of 75 cents.

Picture
Recently listed and with a $1.9bn market cap, Tyro Payments (TYR) is a much larger version of SMP with 45,000 terminals in Australia and is targeting $240m of revenues next year. The total market opportunity is 1m terminals which are predominantly managed by the big four banks currently. We see this vertical as a non-core business for the large banks and expect the nimbler and more innovative TYR to win further share off the incumbents. This should translate to the current growth rates continuing for years to come. 

Our industry research shows that both TYR and SMP offer merchants a more flexible solution and in some cases a huge saving on merchant fees. The RBA review into Least Cost Routing is a positive.  We value TYR at over $4.50.

Picture
Finally, our preferred pick on a global scale is EML Payments (EML). Unlike TYR and SMP, which are merchant acquiring businesses, EML is a MasterCard/VISA issuer and has an impressive track record of growth over the last five years. The recent acquisition of Prepaid Financial Services (PFS) in Europe was transformational, will see EML process over $18bn of transactions this year and deliver $220m of revenues and $70m of profit (on a pro forma basis). 

We expect further growth next year to come from EML’s digital bank solutions and other verticals such as gaming cards and digital gift cards across a thousand shopping malls globally. We value EML at $9.00 and the stock was just added to the ASX200 index. We see the upcoming half year result as a positive catalyst for the stock and we would expect another acquisition this year, potentially coming from the North America region. Once again, watch this space.

Disclaimer: SMP, TYR and EML are all currently held in TAMIM portfolios.

The TAMIM Australian equity portfolios, managed by Ron Shamgar, delivered outstanding returns for the 2019 calendar year:

Australia All Cap | 55.78%
Small Cap Income | 38.93%
Click here to express your interest and talk to someone about TAMIM's Australian equity strategies today.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Stock Commentary

    At TAMIM we are committed to educating investors on how best to manage their retirement futures.

    Sign up to receive our weekly newsletter:

    * indicates required

    TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.

    Archives

    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    December 2015

    Categories

    All
    2016 Presidential Election
    5G
    AGM Season
    Apple (AAPL.NASDAQ)
    Asia Small Companies
    ASX
    ATL.AX
    Aus Equity All Cap Portfolio
    Aus Equity All Cap Value Portfolio
    Aus Equity Growth Portfolio
    Aus Equity Income Portfolio
    Aus Equity Small Cap Portfolio
    Australian Stocks
    Autonomous Vehicles
    Big Four Banks
    Brexit
    Electric Vehicles
    Emerging Markets
    Energy
    ENN.AX
    FAANG
    Financials
    Fintech
    Global Equity High Conviction Portfolio
    Global Mobility
    Gmg.ax
    Gold
    Growth Stocks
    Guy Carson
    Healthcare
    Income Investing
    Infrastructure
    International Stocks
    Investment Thematics
    IT Services
    Mergers & Acquisitions
    Mobility
    Pharma
    Property
    Rare Earths
    REITs
    Reporting Season
    Retail
    Robert Swift
    Ron Shamgar
    SLK.AX
    Small Cap Income Portfolio
    Small Caps
    Stock Report
    Takeovers
    Technology
    Telco Stocks
    Telstra (TLS.ASX)
    Tourism
    TPG
    Utilities
    Value Investing
    Video
    Wesfarmers (WES.ASX)

    RSS Feed

TAMIM | Equities | Property | Credit
​

TAMIM Fund
Australia All Cap
Australia Small Cap Income
Global Mobility
Global High Conviction
Credit

Listed Property
TAMIM Property
Company
About
Contact
Insights
Invest Online
Login
Other
Privacy Policy
Terms & 
Conditions
​Disclaimer
Contact
Level 4, 55 Grafton Street
Bondi Junction, Sydney NSW, 2022

1300 750 007

ima@tamim.com.au

DISCLAIMER

​The information provided on this website should not be considered financial or investment advice and is general information intended only for wholesale clients ( as defined in the Corporations Act). If you are not a wholesale client, you should exit the website. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions. Where the website refers to a particular financial product, you should obtain a copy of the relevant product services guide or offer document for wholesale investors before making any decision in relation to the product. Investment returns are not guaranteed as all investments carry some risk. The value of an investment may rise or fall with the changes in the market. Past performance is no guarantee of future performance. This statement relates to any claims made regarding past performance of any Tamim (or associated companies) products. Tamim does not guarantee the accuracy of any information in this website, including information provided by third parties. Information can change without notice and Tamim will endeavour to update this website as soon as practicable after changes. Tamim Funds Management Pty Limited and CTSP Funds Management Pty Ltd trading as Tamim Asset Management and its related entities do not accept responsibility for any inaccuracy or any actions taken in reliance upon this advice. All information provided on this website is correct at the time of writing and is subject to change due to changes in legislation. Please contact Tamim if you wish to confirm the currency of any information on the website.  

magellen, kosec, clime, wilson, wam, montgomery, platinum, commsec, caledonia, pengana, tamim

  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT