In light of (i) the publication of the latest revised upward estimates of the growth in the number of non-cash transactions worldwide and (ii) the publication of the group’s financial achievements in 2021, analysts have updated their model and come out with a new target price of 8,727 DH (vs. 8,145 DH previously).
“The growth prospects of its industry mean that our conviction on value is today stronger than ever, HPS representing, in our opinion, a unique investment opportunity on the Casablanca Stock Exchange for both local and foreign investors. “, explain the analysts.
Indeed, HPS being one of the world leaders in an extremely dynamic electronic payment industry, the group offers and will continue to offer unparalleled growth prospects within the Casablanca Stock Exchange (CAGR of its RNPG of 25.0% over the period 2021-2025E), as well as a very interesting geographical diversification of its income. Investing in HPS, they believe, is therefore equivalent to investing in one of the world leaders in one of the most promising industries for many years to come.
Indeed, with an average annual growth of 18.9% in the number of non-cash transactions worldwide over the period 2021E-2025Ethe electronic payment industry is now one of the most dynamic in the world.
Thus, with (i) a constantly increasing number of credit and debit cards worldwide (double-digit growth rate), (ii) new technologies favoring non-cash means of payment as well as (iii) increasing adoption of electronic payment methods by emerging countries, this industry is set to continue its strong growth in the years to come.
In addition, the consolidation of IPRC and more particularly of ICPS should allow the group to fully capture the growth potential of the MEA region (Middle East and Africa), and thus reach a new level in terms of operating margins over the medium term.
“Thus, HPS represents, in our opinion, a unique investment opportunity and remains one of our top picks, the stock offering excellent growth prospects, very good financial solidity and an extremely attractive potential total return in the medium term with a total shareholder return of more than 65% within 3 years”, announces CFG Bank.
And to continue: “With a target price of 8,727 DH, we believe that the current stock price of HPS does not reflect the long-term global growth potential of this industry, and that HPS is really in a class of its own and should only be compared to the world’s best operators”.
Opinion and Valuation
HPS is currently trading at P/E 2022E et 2023E 30.9x and 24.5x respectively, valuation levels that we believe are particularly low in current market conditions and given its growth profile. Analysts believe that the stock is currently undervalued and recommend buying it with a target price of 8,727 DH (vs. 5,351 DH on 01/08/2022), corresponding to an upside potential of the stock of 63 .1% and induced P/E of 50.4x and 40.0x in 2022E et 2023E respectively.
Such optimism on the value is justified in particular by a unique growth potential within the Casablanca Stock Exchange with a capacity, which is no longer to be demonstrated, to improve its margin rates from year to year and which should lead at a TCAM bottom-line rising to 25.0% over the period 2021-2025Etaking advantage of the strong growth experienced by the payment industry both nationally and internationally.
For all these reasons and many others, HPS represents, according to them, an extremely interesting investment opportunity and is one of their top picksthe stock offering a combination of attractive valuation levels, excellent growth prospects, very good financial solidity, ainsi only a potential total shareholder return (TSR) very attractive (68.0% over 3 years).
