African fintechs driving financial inclusion, profitability - Imara
The fund manager was bullish about three listed fintechs specifically - Fawry, Equity Group and Safaricom Kenya.
African listed fintechs are seeing strong revenue growth, according to fund manager Imara Asset Management. In a note to investors on the latest results of some of its listed fintech holdings, the firm described recent performance as “incredibly encouraging.”
“After what was an incredibly encouraging set of 2023 numbers, these 1Q24 numbers further build on that momentum,” the note said. “The strong growth in revenues and profitability reinforces our thesis on the companies themselves as well as the fintech theme in Africa.”
The note highlighted three specific companies: Fawry (EGX:FWRY), Equity Group (NSE:EQTY), and Safaricom Kenya (NSE:SCOM).
Fawry:
1Q24 gross revenues, up 61%
EBITDA, up 111%
Earnings per share (EPS), up 149%.
Imara comment: “These achievements will continue as the higher growth segments increase their weight in the portfolio of service offerings. Within this revenue growth, Acceptance grew 96% and Supply Chain Solutions grew 70%.”
Equity Group:
1Q24 gross revenues, up 25%
Profit after tax (PAT), up 25%
Return on Equity (RoE), up 29%
Imara comment: “This puts [Equity Group] on a 2024 PE of 2.1x and a price to book of 0.6x, an unhinged valuation given their high RoE, capital adequacy ratio and conservative loan provisioning.”
Safaricom Kenya:
FY23 gross revenues, up 12%
EBITDA, up 17%
Operating free cash flow, up 11%
Imara comment: “Within [Safaricom’s revenue growth], Mpesa, their mobile money arm, grew 19% and now has 32m customers. Safaricom Ethiopia launched Mpesa in the second quarter and already has 5m customers, strong revenue growth will follow suit. The Group now trades, well below its historic range on a forward PE of 9x and EV/EBITDA of 4x. As Ethiopia grows and contributes to profitability, these multiples will wind down very fast.”
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