EML rallies 10% on back of major deal with Spain’s national post office

Having fallen off a cliff late April, EML Payments’ (ASX: EML) share price received a welcomed kicker at the open today, up 11.83%, after the embattled prepaid card payment business announced a major deal with Spain’s national post office.

EML and European client, Correos, Spain's national post office network, will assist in the issuing of 500,000 virtual prepaid cards worth EUR400 ($602.7) each.

Part of a Youth Cultural Bonus tender, card funds – which have a total a currency-adjusted value of $320m - are expected to be spent by eligible 18-year-olds on cultural products and initiatives, including the performing arts, live music, films, libraries and museums.

FY23 guidance

Management expects the program to contribute to revenues and earnings (EBITDA) in FY23 and form part of the FY23 guidance range once released to market.

Commenting on today’s announcement, Emilio Gutierrez, head of Spain at EML noted:

“Our business relationship with Correos goes back a long way… We're delighted to continue to build on this partnership with such a significant and important initiative in helping support the arts sector across Spain.”

Similar programs

The Youth Cultural Bonus tender program is expected to utilise a material proportion of the growth cap imposed on EML’s European licence by the Central Bank of Ireland (CBI) which - subject to any CBI decision to removal or amend - remains in place until expiry in December 2022.

Today’s deal builds on similar government stimulus programs supported by EML in the past 12 months, including the GBP10m Jersery stimulus package and the GBP140m Northern Ireland economic stimulus package.

Then there was the emergency funding assistance to governments and international aid organisations in Europe, Australia and the US.

Has the bear-run ended?

What also clearly added to the fortunes of EML’s share price today was a rebound in the tech sector following strong trading on Wall Street’s NASDAQ index overnight.

One of the most shorted stocks on the ASX, the company also received some underlying support early June after the Australian Ethical Investment (ASX: AEF) flagged it had become a material shareholder in the company following sustained buying activity in May.

While share lending agreements equated to 8.12% of the total issued scrip early June, the emergence of a large institutional buyer on the mid-cap company’s register could signal to short sellers that the stock’s bear run has ended.

EML share price today.