LONDON, August 18, 2015 /PRNewswire/ --
Edison Investment Research, a leading international investment research firm, announces the initiation of full coverage of eServGlobal
Highlights of the analysis on eServGlobal by Edison's technology analyst Katherine Thompson include:
eServGlobal's core business provides software to support domestic mobile top-up and mobile money services. Recent restructuring has materially cut the cost base and should position the business to better respond to customer demand. The core business is targeting revenue and margin growth from geographical expansion, growing the reseller channel and upselling mobile wallet solutions to existing recharge customers. For international remittances, eServGlobal has a 35% stake in the HomeSend JV alongside MasterCard (55%) and BICS (10%) - HomeSend has the potential to reduce the cost of sending smaller sums of money cross border.
We value eServGlobal on a sum-of-the-parts basis to take account of the two different business models and ownership structures. Using peer multiples for the core software business and a DCF for the HomeSend JV, which assumes that the JV processes 2% of the international remittance market by 2024, we calculate a valuation of 30.6p per share. Currently trading at 15.0p, to close the valuation gap we will need to see regular operational updates for HomeSend tracking new hub members, volume growth and progress towards profitability, combined with evidence that the core business is managing to win new customers and upsell to its existing customer base.
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