Why did ASX 300 share OFX just rocket 20%?

a man sits at his computer pumping his fist as he smiles widely with eyes closed and an expression of great joy as he looks at his laptop screen in his own home with a cup nearby.a man sits at his computer pumping his fist as he smiles widely with eyes closed and an expression of great joy as he looks at his laptop screen in his own home with a cup nearby.

ASX 300 share OFX Group Ltd (ASX: OFX) is skyrocketing after the foreign exchange services provider released its full-year FY23 results

OFX shares are up 19.94% at the time of writing to $1.847 apiece.

Formerly known as OzForex Group, OFX provides foreign exchange services and online international payment services. Its brands include OFX, CanadianForex, NZForex, Tranzfers, and ClearFX. 

ASX investors are thrilled with today’s news, so let’s dig into those numbers. 

OFX shares take off on record EBITDA 

The highlights for the 12 months ended 31 March 2023 are: 

  • Turnover of $39.1 billion, up 17.9% on the prior corresponding period (pcp) 
  • Revenue $225 million, up 42.4% pcp 
  • Net operating income $214.1 million, up 45.6% pcp 
  • Underlying operating expenses $151.7 million, up 47.9% pcp 
  • Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) $62.4 million, up 40.3% pcp 
  • Statutory EBT $37.5 million, up 14.8% pcp 
  • Statutory net profit after tax (NPAT) $31.4 million, up 25.6% pcp
  • Net cash held $93.8 million, up 11.3% pcp. 

Share buyback

The company also announced it will reinstate its share buyback program with the aim of acquiring up to 10% of OFX shares over the next 12 months. 

OFX shares have dropped in value by 21% in the year to date, which is partly why the company wants to employ this strategy. 

According to a statement: 

The Board considers that at the prevailing share price this is an efficient way of returning capital to shareholders while maintaining the flexibility to pursue accretive M&A [merger and acquisition] opportunities that may arise. 

Acquisition to enhance corporate services 

OFX also announced it will acquire Sydney-based business-to-business payments company Paytron to enhance its offering to corporate clients.  

It will pay $6 million for the business in the first year, and fund the rest of the purchase through dynamic cash funding based on revenue milestones,

The consideration includes up to 11.25 million deferred performance securities subject to development and revenue vesting conditions. 

OFX expects to complete the purchase by 1 July.

OFX wants to buy Paytron for its platform, which offers multi-currency card accounts.

According to a statement: 

This is in line with OFX’s focus on expanding its services for B2B clients to generate revenue beyond spot FX and accelerates its current investment program. 

What did management say? 

OFX CEO and managing director Skander Malcolm said: 

I am delighted to report a record result for OFX, which demonstrates our successful pivot to B2B, and our ability to grow value from our loyal client base. 

Our recurring revenues are now 84%, driven by our strong Corporate segment, and it was pleasing to see signs of recovery in our High Value Consumer segment towards the end of the period as interest rate rises begin to stabilise. 

Outlook and FY24 guidance 

Excluding the Paytron acquisition, OFX expects to grow its net operating income to between $225 million and $243 million and its underlying EBITDA to between $63 million and $74 million. 

If Paytron is included, the expectation for net operating income is between $226 million and $244 million and EBITDA between $59 million to $70 million.  

Malcolm said:

FY24 assumes continued growth in our Corporate segment and our other segments to perform in line with FY23. 

We are also excited to invest in new and valuable products and services for our Corporate clients through Paytron, which we are confident will deliver meaningful returns over time. 

Recent history of OFX shares 

OFX shares are down 28% over the past 12 months.

By comparison, the S&P/ASX 300 Index (ASX: XKO) is up 1%. 

The post <strong>Why did ASX 300 share OFX just rocket 20%?</strong> appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended OFX Group. The Motley Fool Australia has recommended OFX Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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