Why did the OFX Group (ASX:OFX) share price rocket 17% this week?

The international multicurrency payments provider has had a ripper week.

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Key points

  • OFX shares simply kept on rising this week, up 17.4% by Friday's close 
  • The payments company released an investor presentation and trading update on Wednesday
  • In the past 12 months, the OFX share price has risen by 133%

OFX Group Ltd (ASX: OFX) had a stellar week with its share price advancing 17.4% by Friday’s close to $2.50.

On Wednesday, the international multicurrency payments provider hosted an Investor Day and released a trading update and investor presentation.

TradingView Chart

Why has the OFX share price been surging higher?

Shares in OFX jumped in early March and were helped along by the company’s investor presentation this week.

OFX outlined that it expects net operating income (NOI) to grow between 23–25% in FY22 to $145–$147 million.

The group also said it had secured its first monthly turnover of $3 billion in 2021. This is just 3.5 years after achieving its maiden $2 billion dollar month.

OBX also projects underlying EBITDA to grow from $30 million in FY21 to a range of $43–$45 million this year.

Not only that, but the company says it will become more valuable “post Firma acquisition”.

OFX announced plans in December to acquire Firma, a Canadian corporate foreign exchange business, for C$90 million (A$98 million). This could add another circa $9 million in cash generation and 1.7 cents in earnings per share.

As a result of the acquisition and on the basis of the last twelve months (LTM) EBITDA, OFX says it will become one of the world’s most profitable cross border payment companies.

Changes in the payments space

In its investor presentation, OFX went into greater detail about recent legislative changes in the payments space. In particular, it looked at anti-money laundering (AML) and the integration of technology and software.

For example, a big industry change since 2015 has been the access to SaaS risk management platforms. Back then, the technology was often bespoke and too expensive.

Not only that, but traditional banking routes are becoming more accepting of payments companies.

“[In 2022] Banks seek quality payment firms for commercial partnerships, but requires high risk culture & capabilities to qualify,” the company said.

OFX share price snapshot

In the past 12 months, the OFX share price has risen by 133%, as shown in the chart above. It has lifted 9% this year to date.

ASX investors were hungry on Friday, with the trading volume twice that of OFX’s 4-week daily average of 605,000 shares.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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