eTranzact International Plc, Africa’s leading provider of mobile banking and payments services has taken a leap forward as third quarter earnings surged amid economic doldrums crimping the growth potentials of companies operating in the country.
The company has been recording tremendous growth at both the top and bottom lines since 2013, making the IT firm’s stocks allure to investors.
Analysts attribute the stellar performance of the mobile company to the ability of its management to tap into the Nigeria economy using innovative products, focused policies and strong marketing strategies.
For the first nine months through September 2015, eTranzact’s net income increased by 130 percent to N541.4 million from N235.3 million the same period of the corresponding year 2014.
The company’s sales were up by 20 percent to N6.3 billion in 2015 as against N5.2 billion the previous year.
The company facilitates mobile banking services of 11 banks through its mobile switching platform, process over N1 trillion every year and has more than 10 years’ experience processing financial transactions in Africa.
While other IT firms are grappling with macroeconomic headwinds caused by lower oil price and rising inflation, eTranzact’s net profit margin, a measure of profitability and efficiency jumped to 8.57 percent in 2015 compared with 4.49 percent last year.
Analysts say eTranzact is a super impressive company given its ability in making inroads in mobile banking despite the impositions of foreign exchange restrictions and the multiplicity of regulations by the central bank.
The central bank of Nigeria (CBN) last year, applied rules and restrictions to stabilize the naira after it declined to a record low in February as the price of oil, the nation’s major foreign-exchange earner fell by half. CBN devalued the naira twice since November 2014 and prevented banks from buying dollars in the interbank market without matching orders, steadying the exchange rate while reducing liquidity.
Industry players say Nigeria young population and huge unbanked citizens means there are opportunities for eTranzact to tap into and consolidate market share.
The mid- to late thirties is currently the key demographic for mobile banking, reflecting a sweetspot of technological comfort and relatively high economic activity, driving very high relevance of mobile banking services, and, therefore, the highest adoption rates, according to KPMG 2015 report on global mobile banking.
Further analysis of the eTranzact financial statement showed cost of sales increased by 11.5 percent as costs of buying diesel oil to run generator plants for the purpose of production continue to swell production costs. Operating expenses were up by 24.4 percent to N1 billion.
However the company is spending less on input costs to produce each unit of product as cost of sales ratio reduced to 72 percent in 2015 from 77 percent last year; this means for every N100 the company generated in sales, it spent N72 on production costs in generating those sales.
Gross profit increased by 53 percent while operating profit moved by 118.7 percent to N726.7million. Total assets jumped by 10.7 percent to N5.2 billion.
BusinessDay calculations shows the mobile banking giant has outperformed its peers in terms of magnifying the earnings of shareholders and delivering a return on equity higher than cost of capital.
eTranzact is utilizing the resources of shareholders in generating higher profit as return on equity (ROE) jumped to 16.33 percent in the period under review from 7.89 percent last year.
The company share price closed at N2.70 on the floor of the exchange while market capitalization was N11.34 billion.
By Our Reporter
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