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Worldline’s Q3 23 results were disappointingly weak. The French company reported results below the consensus expectations across all three of its business units. These negative outcomes can be primarily attributed to macroeconomic challenges, with a particular focus on Germany. The company updated its target for FY23, expecting lower revenue growth but more importantly lower margins, which runs counter to the Worldline growth story.
Companies: Worldline (WLN:EPA)Worldline SA (WLN:PAR)
AlphaValue
Worldline released its Q3 2023 financial results, which fell below both the consensus and our own estimates. Additionally, the company revised its revenue growth guidance for the fiscal year 2023, reducing it from the previously anticipated range of 8-10% down to 6-7%. What Is even more unexpected is that the company now foresees a stagnant OMDA in absolute terms for FY23, indicating a 150bp decline in margin. We do not anticipate a substantial improvement before the second half of 2024.
Worldline’s HY 23 results came broadly in line with expectations, albeit well ahead of our forecasts at the bottom line. The firm continues to deleverage and recorded improving profitability – as planned. However, we do not see any changes to our investment case nor in the management’s speech, implying that we confirm that the shares are currently fairly priced.
Worldline’s Q1 23 trading update has beat expectations (ours and those of consensus). While we believe that re-pricing and inflation have sustained volumes and revenues, previous merchant wins – on the back of an attractive product – have boosted merchant counts and volumes. We confirm our case that Worldline has a great Legacy product, which should continue to gain market shares from banks, but which is operated at slowly improving margins (or slower than hoped for).
Strong Q1 23 trading update published by Worldline. While Financial Services and Mobility revenues were fully in-line with our estimates and the consensus, Merchant Services (MS) posted a strong beat vs. expectations. This performance from MS comes from sustained processed volumes, where we believe that inflation played a part and expect the comps. to toughen from Q2-Q3 onwards. We confirm our case in that Worldline’s issue does not come from revenue generation but rather OMDA margin expans
Worldline has released Q1 23, FY 23 and FY 24 company-compiled consensus figures. As in our comment on the Q4 22, the consensus is steadily being revising downwards in terms of the forward-looking estimates of profitability and we are too. As of today, a miss on the firm’s CMD OMDA margin objectives is expected. Our change of opinion on Legacy payment firms, initiated in mid-January, is confirmed. We believe that inflation and the stacked back-end infrastructure of Worldline (stemming from its
Worldline’s results were slightly ahead of our expectations and those of consensus. However, while Merchant Services (MS) performed strongly, the rest of Worldline could not keep up. Despite the decent figures reported and the potential delivery of its plans, uncertainty lies in the realisation of such objectives. Also, we believe that the firm’s long-term margin expansion will not be so radiant (as per our sector downgrade paper). We maintain our negative opinion.
Worldline has released the company-compiled consensus for Q4 22. The figures have been trending downwards since the start of 2022. We confirm our bearish case for the firm: despite quality and brand recognition, it is too expensive when considering the challenges beyond 2023 and forward.
Worldline released a strong Q3 22 trading update but the market has reacted negatively owing to several reasons we believe: no guidance uplift despite the top-line growth well ahead of the plan, an inconsistent message vs. the previous quarters and no outlook for 2023. Despite this, we firmly believe that the market reaction is unjustified, and we reiterate our strongly positive opinion on the stock.
Worldline posted a very satisfactory set of Q2 results, implying a strong H1 22. While the firm keeps on growing organically and delivering on its guidance, we believe that today’s share price reaction (+14% at peak) embeds a catch-up on the previously low market valuation.
Companies: Worldline SA (WLN:PAR)Worldline SA (0QVI:LON)
Worldline’s Q1 22 Revenue release came with a beat. The firm disclosed strong volumes and outperformance in all of its business lines. The firm confirmed the strong momentum occurring in the transition to cashless transactions and, so far, does not seem alarmed by the potential consequences of the Russian-Ukrainian conflict. Guidance confirmed.
Worldline’s release of its Q4/FY results comes with no surprises but with a slight beat, delivering on the firm’s promises. Coupled with yesterday’s announcement of TSS’s disposal, as well as the much-appreciated improved transparency over market shares, processed volumes and transactions, Worldline is on its way to regaining the market’s confidence.
Bloomberg reported that those people in the know have said that Worldline’s sale of its Terminals business may be imminent. If this is confirmed, the drag on Worldline’s share price would be lifted and finally positively oriented.
Worldline’s announced guidance for the years 2022-24 is fair, from the moment the firm is considered as what it actually is: not a Tech pure play. We are pleased with the top-line CAGR of 9-11% over the period as well as a 50% FCF conversion rate, however, we are slightly disappointed with the OMDA margin target trending towards 30% by 2024. Beyond that, we can expect Worldline to keep on growing with acquisitions, however, with more limited means than historically.
Worldline’s results, although in line with the guidance for Q3 21, were disappointing as the market expected a stronger sign after the guidance uplift. We believe Q4 will be better than that implied by the guidance. Although the Board has approved TSS’s disposal, we do not believe that much progress has been made and do not foresee a happy ending considering the combination of anticipated sale price and accumulated delay in selling the unit.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Worldline SA. We currently have 122 research reports from 4 professional analysts.
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Cavendish
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Canaccord Genuity
FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi
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The manger comments that, in common with the other trusts in the renewable energy sector, the last six months have continued what has been a challenging period for the Bluefield Solar Income Fund (BSIF). It adds that the trust’s ongoing fundamental performance has failed to reverse a steady slide in its share price which began back in May 2023. Despite this, it says the company has continued to deliver solid NAV growth and market-leading shareholder distributions thanks to a range of contractual
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QuotedData
2023 results are, as indicated in its February pre-close update, “slightly ahead of market expectations”. Current trading continues to improve, with 1Q24 underlying operating profit up yoy, “reflecting the benefits of the Group’s transformation programme completed in 2023 as well as improving market conditions.” With net cash of £35m at end 2023, the Board approved 7.4p final DPS and £7m buy back.
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Zeus Capital
S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi
Companies: S&U plc
Edison
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
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Hardman & Co
Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web
Companies: Foresight Solar Fund Limited GBP
Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness t
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Liberum
International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th
Companies: International Public Partnerships Ltd
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In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.
Companies: Regional REIT Ltd.
Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…
Companies: Witan Investment Trust PLC
Kepler | Trust Intelligence
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