MyBucks S.A.
15.02.2018 - Equity Research Report (english) // buy
Research Note – MyBucks S.A. - english
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ISIN: LU1404975507
Branche: Dienstleistungen
Rating: buy
Kurs bei Erstellung in €: 9.90
Kursziel in €: 23.25
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5a;11
FY 2016/2017 dominated by acquisition effects; dynamic revenue growth and significant improvement in earnings expected; unchanged BUY rating
For MyBucks S.A. (short: MyBucks), the past financial year was dominated by the acquisition of the Opportunity companies (Kenya, Tanzania, Mozambique, Uganda) as well as the acquisition of the Australian digital microcredit provider Fair Go Finance. As expected, MyBucks not only implemented this regional expansion of their business activities, but also, in particular by acquiring Opportunity credit institutions, expanded its product range to include banking services.
The contribution to revenue from the newly acquired companies amounted to a total of €10.93 million and made up a large portion of the 48.3% growth in revenue, which reached €53.77 million (previous year: €36.25 million). MyBucks also posted purely organic, dynamic revenue growth amounting to 18.2% to reach €42.84 million.
Overall, MyBucks recorded a negative net result of -€11.32 million (previous year: -€0.61 million). Based on the almost constant EBIT, this is due to significantly higher financial expenses compared with the previous year, amounting to €21.31 million (previous year: €11.69 million). Different instruments are used to finance the loan book, with unsecured loans as the primary source. In line with the expanded loan book, financial liabilities rose to €121.02 million (30/06/2016: €59.23 million) and as a result, financial expenses increased significantly.
We have identified two factors, or challenges, at MyBucks that are key to future business development. In order to be able to use economies of scale and therefore scale effects, it is essential that we continue on the dynamic course of growth taken thus far. An important step was taken in this regard in the past financial year with the acquisition of the Opportunity companies.
The second important factor in future business development is the expansion of low-interest financial resources, as a basis for expanding the revenue-generating loan book. Despite the increase in average financing costs over the past financial year, based on our calculations, a trend reversal is likely to start here. According to information from the company, comparatively expensive loans are set to be repaid and replaced by new forms of financing. Furthermore, customer deposits are to be gradually increased, which may be easier to implement given the acquisition of the Opportunity credit institutions. Customer deposits most recently rose to €11.31 million (30/06/2016: €0.39 million) and make up 9.3% of the total financial liabilities. The recent successful capital increase of €11.7 million (issue of €1.3 million shares) will be used to reduce comparatively high-interest mezzanine capital and therefore to further reduce financing costs.
Under the updated residual income model, we have calculated a target price of €23.25 (previously: €27.60). The reduction in target price is based both on the dilutive effect resulting from the capital increase (issued shares priced at €9.00) and our forecast reduction for the coming financial year. This was made on the basis of the worse-than-expected figures for the 2016/2017 financial year. Based on the current share price of €9.90, we are maintaining our BUY rating.
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