One important quality I always look for in companies is hunger - the desire and tenacity to be the best, whatever the circumstances. And Equals Money (EQLS) - a rapidly expanding B2B international epayments and fintech platform – fits the bill.
Even after posting record first half sales today - up 43% year on year to £45.0m, with sales per working day up 42% at £363k from £255k last year and up 21% sequentially on the second half of 2022 - management are certainly not resting on their laurels as they continue to drive the business further forward.
Yesterday Equals completed the potentially transformational acquisition of OONEX in Belgium for £3.8m in stock (3.94m shares at 96p). Once fully integrated, OONEX should enable the enlarged group to offer its cutting edge services right across Europe, in one fell swoop expanding the total addressable market by an order of magnitude.
Better still, H1 gross margins climbed too - by 3% YoY to >50% - meaning that even after absorbing short term losses at OONEX once initially integrated in H2, (which either way should reverse as the unit scales), FY23 trading remains at least in line with consensus expectations with adjusted EBITDA margins anticipated to be 20% (vs 17.4% LY).
As a result I've upgraded my previously more conservative FY23 forecasts to EBITDA of £18.5m on revenues 32.9% higher at £92.6m, which in turn nudges my valuation up from 160p to 168p a share. At the current 96p, the stock trades on modest EV/EBIT multiples of 14.9x and 10.1x for this year and next, which seems overly conservative considering adjusted EPS is set to climb to 14.1p by 2027 - at a 27% CAGR - from an estimated 5.5p forecast this year.
CEO Ian Strafford-Taylor commented: “It is very pleasing to be able to report H1’23 revenues that exceed those posted for the whole of 2021. Our trading performance clearly shows the success of our focus on the B2B customer segment and the continued growth of our Solutions business. With expanding distribution channels opening up increased addressable markets, we look forward with confidence.”
Watch out for interims on Tuesday 12th September I suspect there could be more good news ahead.
