Can EML produce another 280% annual growth in 2020?

The innovation in the payment industry is only the beginning. Whether you are an investor or not, we all purchase products. How you purchase your products is the real question? Do you use Afterpay, a credit card, Split it Payments or just your hard-earned money in the bank? The broad range at which we can purchase goods will only increase. Providing investors with an exciting investment opportunity. Today, we will discuss EML Payments (ASX: EML).

EML payments can be split into 3 sections.

  1. General Purpose Reloadable cards

Here customers can load their salary packages, credit cards or link their online game winnings.

  1. Gift and incentive

Here EML provides gift cards for regional malls and premium outlets. EML is the world’s largest provider of shopping mall gift cards. In turn, EML’s global reputation results in new businesses constantly aligning themselves with EML’s gift card segment.

  1. Virtual Account Numbers (VANs)

Here EML facilitates a less risky method of payment between businesses and their suppliers. EML assigns a project manager to your business to handle supplier contact. With EML being a certified processor for Visa and MasterCard, all customers must do is approve invoices. Ultimately increasing the speed of business-supplier transactions.


Why are EML payments up 281% YTD?

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Despite, EML’s strategic partnerships and acquisitions, such as NSW Health and Pre Paid Financial services, the share price surge was a reaction to strong financials. Thus, adding EML to your watchlist would be a great start, so you don’t miss out on a possible explosive market reaction. The same strategy is applicable to Macquarie Bank (MQG) however your own research must be conducted and this should not be taken as advice.



EML payments are in an excellent financial position. The company reported $8.45 million profit in June 2019. Resulting in both EML’s third consecutive FY of reporting a profit, and a profit margin increase of 282% since June 2018. Ultimately, profitability reduced risk for conservative investors.

Also, EML experienced revenue growth of 36% over the last FY. Providing a positive relationship between EML’s revenue growth and profit increases. EML currently report a meaningful revenue of $97.20 million (June 2019)

Lastly, EML reported a D/E ratio of 0.1:1 (10%) – June 2019. EML’s lowly geared capital structure is attractive to investors because of the low risk and their ability not to rely on debt to be profitable. Thus, EML’s recent acquisition is not concerning and is somewhat insignificant.


Despite the beautiful financials’ investors must factor in the risks. Why? Because YIG believes in providing investors with a balanced perspective on hot stocks where often people have a biased BUY position.

EML’s ROE of 5.9% is poor. Considering the industry average is 14.7%. Moreover, EML does not distribute dividends. Meaning investors can only make money off EML through a capital gain on the share price.

Is EML a buy for 2020?

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

If the company’s financials continue to grow + you undertake your own research (as this is general commentary) to understand EML, capital gain could be possible with a nice entry point under $5.With a solid track record, strong financial health, and an optimistic future EML’s growth looks upward. March financials should give us a clearer direction on EML’s 2020 success.

However, the success of EML payments depends on their partners ability to increase market share in their respective areas. Thus, if areas such as the new sports betting industry in America is slow to take off we should expect to see a stagnation in EML’s share price.

If EML payments interested you, then check out our articles on Split it payments (ASX:SPT), Zip Co Ltd (ASX:Z1P) or Afterpay Ltd (ASX:APT)

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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.  

Written by Patrick McLoughlin, Associate of YIG. 

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