Shares in Capital Appreciation (Capprec) surged on Thursday after the fintech group reported that annual headline earnings jumped by almost a third on a strong device sales and a robust performance at its software business.
Headline earnings per share for the 12 months ended March soared 29.6% to 13.4c while the total dividend of 7.5c is 73.3% more than a year earlier.
The market cheered the news with the stock gaining as much as 3.35%, the highest in a month, before paring the gains to close at R1.84, up 2.8% on the day. The stock has soared 66% so far this year, valuing the company at R2.4bn.
Capprec’s business includes selling payment terminals such as point-of-sale devices, including debit and credit-card machines. It also provides the back-end systems that allow these devices to accept payments, and the technology that banks and other financial services companies use to add more features to their digital platforms, including loyalty programmes and prepaid vouchers. Capitec, Nedbank and Old Mutual are among its customers.
Like many other technology firms that sell hardware, Capprec been affected by ongoing global supply chain challenges, CFO Alan Salomon told Business Day.
Some of its devices use the older Linux operating system, while others use newer Android-based systems. Salomon said demand for newer devices had been the group’s saving grace as supplies of these were more readily available.
“The traditional line for all the suppliers has been affected by component shortages, occasioned out of Covid problems, first in Vietnam and [then] extended elsewhere. Supplies aren’t as good as we want but they’re getting better. We have about a six-month runway to getting back to normality,” he added.
“The growing demand for Android devices has a much more accommodating delivery platform. Even better than what it used to be pre-Covid for traditional devices.”
Despite these challenges, the company delivered more than 277,000 terminals, an increase of 28% year on year. Revenue was up 34.1% to R831m, as terminal sales increased by 51%, with strong demand for those using Andriod software. Almost two-thirds of Capprec’s revenue was generated from the payments division, and 35.7% from its software unit.
“The large pipelines in all our businesses are indicative of the strength of a longer-term global digitalisation trend,” CEO Bradley Sacks said. The company has the “skills, experience, and track record to capitalise on the demand for these technological advancements and this will continue to support the positive growth prospects for the group”.
According to GlobalData research published in May 2021, point-of-sales devices are set to keep growing in SA, with a market opportunity of more than 800,000 of these devices by 2024.
Juniper Research estimates that the number of smartphones used for point-of-sales will increase from 3.2-million in 2021 to almost 24-million worldwide by 2026.
The company set up its first offices in the Netherlands as part of its international division, which was established in June 2021. This division grew 33%.
During the past financial year, the company acquired 100% of Responsive Technology group and Responsive Digital, as well as 71% of Rethink Digital Solutions. Responsive designs and develops digital applications for clients across SA, the US, Europe and the UK.
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