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Network International warns of tougher conditions ahead, shares slide

By Abigail Townsend

Date: Thursday 19 Jan 2023

Network International warns of tougher conditions ahead, shares slide

(Sharecast News) - Network International Holdings posted a jump in fourth-quarter revenues on Thursday, but warned of increasing headwinds for 2023.
The group, which provides technology-enabled payment services in the Middle East and Africa, said total revenues in the fourth quarter grew 13%. Within that, merchant solutions revenues jumped 20%, but issuer solutions were flat, hit by the delayed signing of new business streams and non-recurring revenues in the prior year.

Looking to the full-year, Network International said group revenues were set to come at $438m, a 27% jump on the previous year, or 29% once the impact of forex translation was stripped out.

Nandan Mer, chief executive, said: "We ended 2022 in a position of strength, having set out a refreshed strategy and delivering on several key commitments, including revenue growth acceleration and financial results in line with guidance."

Looking ahead, however, the firm said that while the outlook for 2023 remained strong, it faced "more challenging economic and inflationary impacts", including slowing growth in some African markets.

It continued: "We expect further EBITDA margin expansion in 2023, although this will be lower than delivered in 2022, impacted by inflationary pressure, particularly employee costs."

As at 0930 GMT, shares in the FTSE 250 company had tumbled 10% at 285p.

Gautam Pillai, analyst at Peel Hunt, said the firm had been hit by unfavourable macro conditions in South Africa during the fourth quarter.

He continued: "While we expect issuer solutions to rebound in the coming quarters, given the current macro backdrop, we expect consensus 2023 estimate revenue and EBITDA estimates to come down by low single digits. That said, we note that operational KPIs remain healthy.

"We believe the long-term business fundamentals remain unchanged, and are bullish on Network International."

Peel Hunt has a 'buy' rating on the stock and a target price of 420p.


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