Here's the positive half of the article. Because, like me, you have a Buy sentiment I assume that's all you need

EML Payments moves up the risk curve

Tom RichardsonMarkets reporter and commentator

Jan 14, 2020 — 11.59pm

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Afterpay isn't the only fintech powered payments business dividing investors in 2020. At a record high of $5.22 EML Payments is up 250 per cent since the start 2019 and up 14 per cent in 2020 already.

Its rise has been fuelled by an aggressive acquisition strategy culminating in a December 2019 deal to buy Irish payments provider Prepaid Financial Services (PFS) for an upfront $423 million.

The deal was funded by raising around $249 million at $3.55 per share, with the balance funded by debt up to $175 million.

As a result of the acquisition strategy EML is now essentially a collection of niche payments businesses. Core products offered include electronic gift cards for consumers, reloadable sports betting or salary packaging cards, and virtual account numbers (VANS) similar to credit cards that offer enterprise payment solutions in the US.

According to the bulls, EML is delivering strong organic and acquisitive growth without blowing out its share count or compromising balance sheet strength.

The PFS deal is expected to be earnings per share (EPS) accretive (partly as EML can raise money trading on a high multiple itself) with forecasts for net debt to EBITDA at less than one times out to 2020-21.

Josh Clark of QVG Capital says the group has re-rated as the market starts to view it as a scalable payments business with predictable revenues, rather than a gift card operator with a mixed outlook.

"It has the things we like to see; intellectual property within its niche, highly cash generative, and its revenue is growing at over 30 per cent organically," he says.

"The core business does 75 to 80 per cent gross margin and PFS does 60 per cent gross margin. Incremental revenue is not necessarily accompanied by incremental cost, so costs are growing slower than revenues. You get great operating leverage as that gross margin is so high."

Josh Clark portfolio manager at QVG Capital. File

Thanks to the attractive economics Mr Clark thinks today's valuation could look cheap two years from now. The average analyst forecast is for EML to have nearly tripled its earnings to 15¢ a share by 2020-21.