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1. Company Snapshot

1.a. Company Description

PayPoint plc provides payments and banking, shopping, and e-commerce services and products in the United Kingdom.It offers bill payment, digital bill payment, eMoney, and cash out services; and retail services comprising ATM, card payments, parcels, money transfer, SIM cards, EPoS, and receipt advertising.The company also provides MultiPay, an integrated solution that offers a suite of digital payments; and PayPoint One retail terminal.


It serves consumers, SMEs, and convenience retailers in the commercial, not-for-profit, and public sectors.The company was founded in 1996 and is headquartered in Welwyn Garden City, the United Kingdom.

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1.b. Last Insights on PAY

PayPoint's recent performance faced challenges, with underlying EBITDA decreasing by £0.2 million (0.5%) to £37.3 million, and underlying profit before tax down £1.2 million (4.5%) to £25.7 million. Despite this, the company announced a resilient half-year performance with progress on key growth projects. However, concerns may arise from decreased profitability and market uncertainties, including challenges in parcel volumes and consumer confidence. Insider transactions were also reported, with a PDMR selling 2,948 shares.

1.c. Company Highlights

2. Mixed H1 Results: Revenue Edges Up, But Profitability Pressured

The company's net revenue came in at £84.7 million, a marginal increase versus the prior half. However, underlying profit before tax declined 4.5% to £25.7 million, primarily due to a 2.3% rise in costs. The actual EPS was 0.2348, missing estimates of 0.2686. As Nicholas Wiles noted, "We've continued to grow our PayPoint core estate with new business in key areas... but we've encountered two specific challenges: the financial terms of our new commercial contract with InPost Yodel have had a greater impact than anticipated, and we've experienced slower growth in OBConnect than expected."

Publication Date: Nov -24

📋 Highlights
  • EBITDA Performance:: Underlying profit before tax at £25.7 million, down 4.5% due to cost increases and revenue challenges.
  • Revenue Trends:: Net revenue £84.7 million, marginally up; PayPoint revenue +2.9% vs. Love2shop -9.6%.
  • Strategic Growth:: PayPoint core estate expansion and Royal Mail Shops rollout to 3,000 stores (target: 8,000 by year-end).
  • Challenges:: InPost/Yodel contract and OBConnect underperformed, impacting earnings and growth expectations.
  • Dividend & Debt:: Interim dividend raised 2.1% to 19.8p; net debt £84 million, down 3.2% from prior half.

Segment Performance

PayPoint segment revenues were up 2.9%, but Love2shop revenues declined 9.6% due to timing issues. The company's digital payments platform has seen accelerated growth, and card processing platform and key carrier relationships have been strengthened. However, the Love2shop business has been impacted by a more prudent accounting treatment, which is expected to unwind in the second half.

Cash Flow and Balance Sheet

The company generated £24.2 million of cash from operating activities, down £4.3 million from the prior half. Net debt stands at £84 million, down 3.2% from the prior half. The company is on track to deliver more than £90 million to shareholders through a combination of ordinary and special dividends and share buybacks.

Valuation and Outlook

Given the current valuation metrics, the stock trades at a P/E Ratio of 17.76 and an EV/EBITDA of 6.32. The Dividend Yield is 20.36%, indicating a significant return for shareholders. The company remains confident in its long-term growth plans, targeting £100 million underlying EBITDA and consistent net revenue growth of 5% to 8%. Analysts estimate next year's revenue growth at 0.3%, indicating a slow but steady recovery.

Operational Highlights

The company has made significant progress in delivering several major projects, including the launch of BankLocal services with Lloyds Banking Group and the acceleration of its partnership with InComm Payments. The Royal Mail Shops and branded 3,000 stores are expected to reach at least 8,000 sites by the end of the year, driving consumer awareness and accelerating the rollout of these services.

3. NewsRoom

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British Land promoted to FTSE 100 as WPP falls out after nearly three decades

Dec -04

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Holding(s) in Shares

Dec -01

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Exploring 3 Top Undervalued Small Caps In Global With Insider Activity

Dec -01

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Total Voting Rights and Capital

Dec -01

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PayPoint plc : Director/PDMR Shareholding

Nov -26

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PayPoint plc : Director/PDMR Shareholding

Nov -24

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PayPoint plc : Director/PDMR Shareholding

Nov -24

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PayPoint PLC (PYPTF) (Half Year 2026) Earnings Call Highlights: Resilience Amid Market Challenges

Nov -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.27%)

6. Segments

PayPoint

Expected Growth: 10.47%

PayPoint's 10.47% growth is driven by increasing adoption of digital payments, expansion of services in the UK and Romania, and strategic partnerships. The company's diversified revenue streams, including bill payments, prepaid services, and ATM transactions, also contribute to its growth. Additionally, investments in technology and operational efficiency have improved customer experience and reduced costs, further supporting growth.

Love2shop

Expected Growth: 4.83%

Love2shop's 4.83% growth is driven by increasing adoption of digital gift cards, strategic partnerships with major retailers, and expansion into new markets. Additionally, PayPoint's strong distribution network and efficient processing systems have enabled Love2shop to capitalize on the growing demand for prepaid cards, further fueling its growth.

7. Detailed Products

ATM

PayPoint plc provides ATM services, allowing customers to withdraw cash from their accounts at various locations.

Bill Payments

PayPoint plc offers bill payment services, enabling customers to pay their bills at various retail outlets.

Top-ups

PayPoint plc provides top-up services for mobile phones, allowing customers to add credit to their mobile accounts.

Parcel Services

PayPoint plc offers parcel services, allowing customers to send and receive parcels at various retail outlets.

Money Transfer

PayPoint plc provides money transfer services, enabling customers to send and receive money internationally.

EPoS Pro

PayPoint plc offers EPoS Pro, a point-of-sale system for retailers, providing a range of services including bill payment and top-ups.

PayByLink

PayPoint plc provides PayByLink, a payment service that allows customers to pay bills online.

8. PayPoint plc's Porter Forces

Forces Ranking

Threat Of Substitutes

PayPoint plc operates in a niche market, providing payment solutions to retailers. While there are substitutes available, they are not as convenient or cost-effective, reducing the threat of substitutes.

Bargaining Power Of Customers

PayPoint plc has a large customer base, but individual customers do not have significant bargaining power due to the company's dominant market position.

Bargaining Power Of Suppliers

PayPoint plc has a diversified supplier base, reducing dependence on individual suppliers and minimizing their bargaining power.

Threat Of New Entrants

The payment solutions market has high barriers to entry, including regulatory hurdles and significant capital requirements, reducing the threat of new entrants.

Intensity Of Rivalry

The payment solutions market is moderately competitive, with a few established players. However, PayPoint plc's strong market position and brand recognition help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 46.17%
Debt Cost 3.95%
Equity Weight 53.83%
Equity Cost 8.20%
WACC 6.24%
Leverage 85.76%

11. Quality Control: PayPoint plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
PayPoint

A-Score: 5.4/10

Value: 3.1

Growth: 3.8

Quality: 5.2

Yield: 10.0

Momentum: 5.0

Volatility: 5.7

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Fonix Mobile

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 8.2

Yield: 7.5

Momentum: 2.5

Volatility: 4.0

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Wirtualna Polska Holding

A-Score: 4.9/10

Value: 7.0

Growth: 8.0

Quality: 5.8

Yield: 4.4

Momentum: 0.5

Volatility: 4.0

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Exclusive Networks

A-Score: 4.9/10

Value: 4.8

Growth: 7.4

Quality: 4.3

Yield: 5.0

Momentum: 2.0

Volatility: 6.0

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Bytes Technology Group

A-Score: 4.6/10

Value: 3.5

Growth: 6.1

Quality: 9.0

Yield: 5.0

Momentum: 2.0

Volatility: 1.7

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BYGGFAKTA GROUP

A-Score: 3.4/10

Value: 2.5

Growth: 8.4

Quality: 4.1

Yield: 0.0

Momentum: 4.0

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.38$

Current Price

4.38$

Potential

-0.00%

Expected Cash-Flows