Without completing a business case and giving away my tradecraft I see Nov as undervalued and due for a rerate once the banking license is issued. I predict the government wants competition in that space and expect it to be issued.(the re rating and share price increase will possibly facilitate a CR, resulting in some large institutional interest and perhaps a strategic partner taking a stake, although this make take a few quarters with many eyes keenly watching how Nov uses their restricted banking license)
Well positioned to grow in the changing world of payments with multiple avenues of growth, blockchain, crypto, payments, digital wallets, vouchers, remittances, business and personal finance and billing.
Signed deals with all that matter, Google, Samsung, UnionPay, Alipay, Chinapay.
The US Emersion business could scale quickly with business while also avoiding, for large scale payments and invoices the growing trend to fabricate and steal funds on the old paper style invoicing systems. This will become more and more important for billing, payments in the future. (Also billing can easily be changed from a cost centre into a profit centre for the business, not sure if Nov is even aware of this or pursuing)
The deal with Ripple and Moneygram and see some SEA countries such as the Philippines where remittances are a percentage of GDP as areas of massive growth, The US market though is where it’s at for remittances to SEA. (The high percentage of the population in SEA without a bank account but with a smart phone has huge potential for payments, although in some Asian markets there are huge barriers to entry as it’s owned and exploited by locals with the banking systems still regulated to protect home advantage, this leads to geo political issues with China for any reciprocal deals with Australia. A good place to research policy is the US Department of state site which explains political and financial systems and their affects on business investment, I am leaning more to the Philippines here and the massive remittance market and barriers to entry but cannot comment much more about the Moneygram deal without seeing it)
NOV has the ability to grow in underdeveloped, developing and developed economies and consistent quarters of growth in revenue places it in my view as a growth company and a potential take over target down the track, but I say growth not in the sense of the word for COVID growth companies like APT etc but the transition away from fiat currency and payments into digital and a facilitator of that growth. (The last week of bond yields has seen growth stocks shunned for value stocks, i rate Nov as a future value stock not deserving the same treatment as the BNPL segment or companies not producing profits and paying dividends while pretty much funding it’s own growth)
The comparison to EML? Time and scale. Also good management. EML was able to see the writing on the wall with physical gifts cards and adapted through an acquisition. Don’t be surprised if EML comes knocking one day as the payments sector is always consolidating and merging. Time will tell on that but Nov appears undervalued and I took a position.
I plan to add to this forum and not duplicate others work, but add critical points as I see it that I feel have been left out or not mentioned so don’t expect a running commentary except with the Fin Review as I usually cut and paste any stories for all to see as I am a subscriber.
A strong speculative buy and this in no way is financial advice and as always, like I did, Do your own research.
P.S, if anything seems vague I apologise as I am dusty this morning.
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