MIDAS SHARE TIPS UPDATE: Hold on to our tip Boku that tripled in a year

Midas tipped Boku 59p right at the start of the first lockdown, when stay-at-home consumers around the world were watching, playing and paying all via mobile phones.

The online payments business had risen to £1.74 per share a year later in March 2021, when readers were advised to bank some profits.

Last week, Boku proved that it still has a winning formula when it comes to payments technology. He announced first half results showing that local payment methods now account for a fifth of turnover.

Local payment methods are, as the name suggests, transactions that are only used in certain parts of the world. They are increasingly popular among an emerging global middle class that is bypassing traditional credit card brands to move directly to country-specific e-wallet payments, or buy now, pay later methods, or pay via text messages. text.

Thanks to Boku, customers using these methods can pay for subscriptions with Spotify, PlayStation and Netflix on their phones.

By doing more business with these ‘mega traders’, Boku can continue to increase sales without needing to acquire new customers, according to stockbroker Peel Hunt. So as long as payment methods around the world remain divided, Boku will thrive.

After-tax profits fell, as the company’s sale of a division allowed it to make a one-off profit last year. But adjusted earnings before interest, taxes, depreciation and amortization (a key measure of core profitability) rose 28 percent. Using this measure and the company’s enterprise value, Peel Hunt estimates that Boku is trading at a 25 percent discount to its peers. The company has no debt.

Change is on the horizon for Boku, with respected chief executive Jon Prideaux moving into a non-executive role. The new boss, Stuart Neal, is the former commercial director of Boku and former commercial director of Barclaycard. He has extensive knowledge of the company and the sector.

Boku’s share price performance over the past 12 months has been impressive: up 41 percent since September 2022, even if they are still below the highs they reached in March 2021, when we advised some profit-taking .

Midas Verdict: The meteoric rise of local payment methods as a source of income for Boku shows that this company is lean and able to take advantage of trends. The cash squeeze isn’t going to slow down anytime soon, and Boku’s work with big companies from Netflix to Amazon gives it plenty of room to grow.

Analysts have improved their forecasts after Boku’s results and the fact that the company is debt-free gives it room to invest. By most metrics, the stock looks like a good bet.

It’s undeniable that, having been on a very good run after Midas defeated them for the first time in 2020, they have regressed from their 2021 heights. However, they are worth holding on to at £1.46 for the next chapter of the Boku story.

Traded in: AIM Heart: BOKU Contact: boku.com or via IFC notice on 020 3934 6630