By Jenny Ruth
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Monday 19th October 2009 |
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Payment systems company SmartPay's purchase of the ETHOS software used in its EFTPOS terminals from Provenco Cadmus's receiver should make a material difference to its future profitability, says McDouall Stuart.
Previously, SmartPay had paid a royalty for using the software. The purchased price, which will be spread over three years, is based on a per-unit fee of not less than $2 million and not more than $7.5 million.
"With the ETHOS system, and the similarly opportunistic acquisition of Provenco Cadmus's payments division in August, SmartPay has cemented its now leading position in the New Zealand payments industry at very low cost," the broker says.
"Together with its telecommunication and media offers, SmartPay provides an integrated offer to merchants that no other company provides," it says.
This makes SmartPay's offer more attractive than the alternatives "and serves to encourage a partnership-like relationship between SmartPay and its customers."
If SmartPay can achieve its forecast of between $7 million and $10 million in earnings before interest, tax, depreciation and amortisation for the year ending March 2010, it "will leave its current market cap of less than $25 million behind."
If it maintains its existing customer retention rate and secures the funding it needs to complete its recent purchases, "SmartPay's future looks very positive."
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