Result Updates For Two Small-Cap FTSE Stocks –MPAY and EQT

Mi-Pay Group Plc

Mi-Pay Group Plc (MPAY) is a London based digital payments company that provides secured digital payment services, that assess, manage and mitigate fraud risks, which means very secured transactions for the customers. The company allows a number of ways/channels for the customers to make successful transactions, which include Online, Mobile Web-based, Interactive voice Response Channel (IVR), PayPal top-ups, Auto Top Ups, loyalty cards and payments through cards. The company’s USPs include high payment success rates of 90 per cent, which is higher than that of the industry at 80 per cent, more traffic recall at company’s site than other eCommerce websites, and an extremely low bounce rate of 8 per cent compared to an industry average of 30 per cent. The company’s strategy for growth is to provide a Risk-free, Friction-Less and No-Limit payment model to customers. Other than the transactions segment mentioned above, which is the core business of the company, the company also has a professional services segment through which the company develops, delivers and hosts all the platforms on which the services and solutions are rendered.

MPAY Financial Performance and Risks (Interim Results for the six months ended 30th June 2019)

On 25th September 2019, the company announced the interim results for six months ended 30th June 2019. The company announced that in the reporting period, they renewed contracts with two biggest clients. The company reported fully managed payments at £58.1 million in H1 2019, which was a 15 per cent increase from H1 2018 at £50.2 million. The company recognised revenue of £1.7 million in the first half of 2019 as compared to revenue of £1.6 million in the first half of the previous year. The company reported the administrative expenses at £1.1 million, which was the same as the previous year. This was in due to the cost reduction strategy that began in the year 2018.  Operational cash outflow for the six months ended 30th June 2019 was of £0.2 million a decrease of 33.33 per cent year on year as compared to the cash outflow in the first half of the previous year at £0.3 million which is anticipated to be offset after the reporting period due to the receipt of a £0.3 million yearly research and development tax credit in October 2019. The company reportedly was near to breakeven at EBITDA level as compared to a £100,000 loss in H1 2018. The company reported a cash balance of £3.1 million as on 30th June 2019.

Risks – The company faces continued risks around the uncertainties associated with Brexit, as around 43 per cent of the total revenue during the first half of the year was from customers based in Europe, outside of the United Kingdom. This includes 29 per cent of the payment services revenue coming from Ireland and 12 per cent from the fraud mitigation services in the Netherlands. There are also challenges around new compliance requirements which may cause an increase in the internal consolidation and restrict client investments. Albeit, the company has ensured its shareholders and customers that they will be increasing efforts to mitigate risks by managing the cost base.

 

MPAY Share P Performance

On 26th September 2019, at 08:05 AM GMT, while writing, MPAY stock traded at GBX 7.00 per share; no change as compared with the previous day’s closing price. While writing, Mi-Pay Group Plc traded 7.69 per cent above its 52-week low price of GBX 6.50, set on August 30, 2019. This was 46.15 per cent below its 52-week high price of 13.00 set on April 29, 2019. The company’s Market Capitalisation was around GBP 3.20 million.

The average volume of trading per day for last one year has been 1,940. The stock has plunged by 30 per cent in the previous one year from the price of GBX 10.00 per share.

The beta of the stock was at 0.6804, showing that the share price movement is less volatile compared to the benchmark market index.

EQTEC Plc

EQTEC Plc (EQT), previously called REACT Energy Plc, is a renewable energy company that is engaged in the business of generating electricity from Bio-waste. The company has operations in UK as well as all across Europe. EQTEC has an EQTEC Gasifier Technology (EGT) which enables them to easily convert Bio-Waste into clean synthetic gas, which is further fed into gas engine to generate high levels of thermal energy, which is then converted into electricity. The company has 5 operational projects, which are: Movialsa in Spain, Karlovo Biomass in Bulgaria, Syngas in Italy, San Esco – Belice in Croatia and Polygen in Poland. The company also leverages its capability in other technologies such as the EQTEC Kinetic Model which is a simulation tool used to predict the thermochemical processes that take place in the gasification plant and the EQTEC Monitoring platform, which is a tool used as a monitoring and control system for energy production plants with EGT. The company’s business model revolves around offering its equipment to plant owners directly or within an Engineering, Procurement and Construction (EPC) contract model for revenue, it generates annual income by providing Operations and Maintenance (O&M) services to the plant owners and also drives revenues by securing fee by licensing its technologies in certain markets.

EQTEC Financial Performance and Outlook (Interim results for the six months ended 30th June 2019)

On 25th September 2019, the company announced its interim results for the six months ended 30th June 2019 in which it reported the revenues of €1.56 million. This was a considerable increase of approximately 185.7 per cent year on year from the revenue reported in H1 2018 at €546,288. The company displayed total loss for the period at €1.96 million in the first half of 2019, as compared to the H1 2018 Loss at €1.87 million. In the month of June 2019, the company also announced a Debt restructuring and placing, as there was a reduction of around 60 per cent of the group’s debt obligations because of a debt for equity swap £2.7 million of its debt. The company announced that it raised around £0.75 million from new and existing shareholders. As on 30th June 2019, the Net Current Assets were at €0.53 million, and the net assets were at €15.80 million. The company’s focus is on development of project pipeline, and on increasing sales as well as on establishing new funding structures for project finance and other development activities.

Outlook – Even though the company has increased its revenues considerably, the losses have increased. This is a major challenge for the company, as their costs have increased significantly too. The company’s focus, post-period, has been around developing a pipeline for new projects so that they can start improving their margins.

EQT Share Price Performance

On 26th September 2019, at 09:00 AM GMT, while writing, EQT stock traded at GBX 0.20 per share; an increase of 5.26 per cent or GBX 0.01 per share, in comparison with the previous day’s closing price at GBX 0.19 per share. While writing, EQTEC Plc traded 10.93 per cent above its 52-week low price of GBX 0.1803, set on August 20, 2019. This was 89.13 per cent below its 52-week high price of 1.84 set on January 15, 2019. The company’s Market Capitalisation was around GBP 5.88 million.

2.12 million stocks of the company have been traded by the time of writing. The average volume of trading per day for last one year has been 5.11 million. The stock has plunged by 84.25 per cent in the previous one year from the price of GBX 1.2700 per share.

The beta of the stock was at 1.7139, showing that the share price movement is significantly more volatile compared to the benchmark market index.