BPS TECHNOLOGY WINS OVER INVESTORS AT LAST
Written on the 6 February 2015 by Nick Nichols
SHARES in BPS Technology (ASX: BPS) surged 13 per cent today as the Bartercard operator beat prospectus forecasts with a $3.3 million maiden interim profit.
The bottom-line result was up from a forecast $2.9 million net profit, leading retail investors to jump on board the company after largely ignoring it since listing in September.
The shares rose 11c to close at 96c, just shy of their $1 issue price and well up on the low of 70c they hit just two weeks ago.
However, CEO Trevor Dietz says institutional investors have backed the company from the outset and that price drops have largely come through thin volumes from retail investors.
"Institutions who invested in the offer have remained with us the entire time and are more than happy with where the business is at," says Dietz.
"From our viewpoint, we will continue to execute the plans we've laid out in our prospectus and I'm sure the share price will reflect our achievements."
The Southport-based BPS generated revenue $24.9 million in the six months to December 31, up from a forecast $24.7 million, while earnings per share of 5.6c are 14 per cent ahead of the forecast 4.9c.
The interim dividend is 2.25c a share.
Highlights of the first half include an agreement to expand operations into China, through local partner Australian Capital Express. The Chinese operation will target manufacturers seeking to sell surplus stock through the Bartercard network and BPS will receive a 6 per cent service fee on turnover.
Bartercard is the world's largest barter trade exchange, processing more than $600 million in transactions a year in a sector that turns over $20 billion a year globally.
BPS currently has more than 54,000 Bartercard cardholders globally and is targeting 100,000 by the end of the 2016 calendar year.
The Chinese expansion will go some way to achieving that goal. Dietz expects revenues from China to flow to the bottom line in the second half of next year as the Chinese partners expand at the rate of three provinces a year.
Further expansion into India and South Africa is expected in the current half year.
"We now have two of the most populous countries on the planet as part of our growth opportunities and, for example, each of the provinces in China has a population base bigger than Australia's," says Dietz.
"We will get 6 per cent of those revenues each and every year from each province. The revenue stream for us can be quite substantive. The same applies to India.
"We always try to take a conservative approach with the way we approach the business. We are going to continue to do that. We want to now consolidate on the gains we've made and we have more expansion opportunities available to us over the next 18 months.
"As we start to roll out some of our developments through China, India, South Africa and elsewhere, that will bring additional revenue streams into the group which in turn will become reliable revenue streams because they are accretive and they are repetitive."
BPS raised $28 million last July with the aim of pushing the Bartercard business to a broader market globally.
The business also has developed cutting-edge technology to service the trade-exchange sector globally, including the TESS trade exchange software platform and Bucqi, a loyalty platform and a B2C payment platform.
BPS Technology collects royalties from the platforms which, along with transaction fees and sign-up fees and franchise fees for new territories, is expected to generate revenue of $51.6 million this financial year.
BPS Technology has forecast a net profit after tax of $6.5 million for the 2015 financial year and a 7.25c dividend per share.
Author: Nick Nichols