EML (ASX:EML) share price lifts 5% as chair spruiks upside potential

Here’s the latest on EML’s financial year so far, its outlook, and its battle with the Irish regulator.

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The EML Payments Ltd (ASX: EML) share price is climbing today following comments from the company’s chair and an update on its ongoing issues with the Central Bank of Ireland (CBI).

EML Payments released its annual general meeting (AGM) presentation to the market this morning.

Within the presentation, EML chair Peter Martin said the company believed its current share price “significantly understates the fundamental value and the upside potential of EML”.

The AGM also saw EML CEO Tom Cregan provide an update on the company’s battle with the CBI.

At the time of writing, the EML share price is trading at $2.95, 4.98% higher than its previous close.

Let’s take a closer look at today’s news from EML.

EML bosses reiterate their confidence

The market is sending the EML share price higher after Martin proclaimed the company’s upside potential while Cregan pushed ahead with EML’s previously provided guidance.

In August, EML provided its outlook for financial year 2022. Then, it stated it expected to reach gross debt volumes of between $93 billion and $100 billion, representing growth of 20% to 30% during the current financial year.

It also expected revenue of between $220 million and $255 million, earnings before interest, tax, depreciated, and amortisation (EBITDA) of $58 million to $65 million, and net profits after tax and amortisation of $18 million to $34 million.

Those figures have been slightly updated today. The company’s now targeting revenue of between $230 million and $250 million. Its EBITDA guidance remains unchanged.

Cregan also provided the company’s results for the first quarter of financial year 2022.

During the quarter ended 30 September, the company’s gross debt value – excluding Sentenial – was $5.5 billion, up 14% on that of the prior corresponding period (pcp).

EML brought in $52.4 million of revenue, up 29% on the pcp. Its gross profit came to $34.4 million, 20% higher than the pcp, while its underlying EBITDA was $11.2 million, an 11% boost.

The company’s net profits after tax and amortisation was boosted 41% higher than the pcp’s to $4.6 million. However, its overheads increased 24% to $23.2 million.

Prepaid Financial Services (PFS) generated around 30% of the company’s global revenues over the quarter.

Over the quarter just been, EML signed 23 contracts and launched 64 programs. It ended the quarter with 114 programs in implementation. Of those 114 programs, 36 are delayed by the ongoing CBI issue.

CBI update

Also likely supporting the EML share price is an update on the company’s battle with CBI.

Today, shareholders heard that all outstanding issues were expected to be settled without any long-term impact on the company.

In May, CBI corresponded with PCSIL over concerns relating to its Anti-Money Laundering and Counter Terrorism Financing risk and control frameworks, and governance.

Cregan today reiterated EML was working with the CBI, with the regulator yet to find any instances of financial crime, money laundering, or counter terrorism financing.

Further, CBI has not unearthed any deficiencies with respect to safeguarding, capital adequacy, or solvency measures.

EML has also been in contact with CBI over a communication it received in early October stating, among other things, the watchdog wasn’t happy with EML’s growth policy.

Cregan said the board replied to CBI’s concerns later that month and was still awaiting a response.

EML is also continuing to forge on with its remediation plan. Cregan stated:

PCSIL has completed 45% of the Level 1 tasks in the remediation plan and is well advanced on remaining items, has provided three detailed updates to the Central Bank and will continue to provide monthly progress updates through to completion.

EML share price snapshot

Despite today’s rise, the EML share price is still in the long-term red.

Right now, it is 3.9% lower than it was this time last month. It has also fallen 30% since the start of 2021.

Should you invest $1,000 in EML Payments right now?

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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