Financial Services

OFX Group pushed 8% higher on record set of numbers: Guides to good growth

Tue 17 May 22, 1:52pm (AEST)
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Key Points

  • OFX Group delivered a 24.7% jump in net operating income to $147m
  • The group experienced double-digit revenue growth across all regions and segments
  • Management attributes a 94% reduction on bad debts to “exceptional risk management”

OFX Group (ASX: OFX) was up around 8% at noon today after the mid-cap international money services provider advised the market it is well positioned to deliver good growth in the year ahead after reporting a record full year result, with double-digit revenue growth across all regions and segments.

For the full year ended March 31, the company delivered a 24.7% jump in net operating income (NOI) to $147m, while underlying earnings were up 53.1% to $44.5m on the previous financial year.

Corporate segment stands out

OFX’s CEO Skander Malcolm flagged the group’s corporate segment as the standout performer with growth of around 30%, with the second half up 20%-plus on the first half.

“This was down to our key growth drivers working well, and substantial growth in Average Transaction Values especially as we were successful in winning the rebound in high value Consumer clients post covid,” noted Malcolm.

Malcolm also attributed a 94% reduction on bad debts on the previous period to “exceptional risk management”.

Highlights at the full year included:

  • Statutory net profit after tax, up 102.4% to $24.5m

  • Group turnover of $33.2bn was up 32.7%

  • Average transaction values (ATVs) up 23.5% to $28,000

  • Revenue up 29.9% on the previous period and up more than 21% in 2H22 versus 1H22

  • North America revenue grew 27.8%

  • Online Seller segment grew revenue by 15.7% (ex-Asia)

  • Enterprise segment grew by 31.3%

  • Consumer revenue was up 24.5%

  • Net cash held of $84.2m and net available cash of $31.6m

  • APAC grew revenues by more than 24%

  • EMEA revenues were up 26%

Share buy-back

The Group’s ongoing capital management strategy included an on-market share buy-back program with a total of 1,912,000 ordinary shares bought back for $2.65m.

However, with the focus now on repaying debt associated with the Firma acquisition, the board has put the share buy-back program on hold and is committed to repaying its debt in less than four years.

Looking forward

For FY23, the group guided to net operating income (NOI) of between $200m and $212m and underlying earnings of between $55m and $60m.

Management expects the recent acquisition of global foreign exchange services provider Firma to significantly bolster revenues in its North America Corporate business.

Management advised investors that the group’s specific focus in 2023 will on the North America region, prioritising growth in its Corporate and Online Seller segments, and winning further prospects in its Enterprise segment while successfully activating existing clients.

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OFX Group's share price is on a tear today.

What brokers think

OFX Group’s share price has more than doubled in the past 12 months and is up 16% year to date.

Consensus on the group is Moderate Buy.

Based on Morningstar’s fair value of $2.58, the stock appears to be undervalued.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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