Hyper-focused on under-serviced EM payments (initiation report)
CAB specialises in B2B cross-border FX and payments, facilitating flows (both ways) between developed markets (DMs) and hard-to-reach emerging markets (EMs). Clients are sophisticated institutions such as commercial banks, central banks, payment Fintechs, and international development agencies.It has only scratched the surface of its opportunity. In 2024, CAB processed £37bn of flows in a high-growth, multi-trillion-dollar market (it focuses on EMs growing at >4%). But even at this scale CAB has robust financials, with revenue of £106m and PBT of £18m in FY24.
In late 2023 and 2024 business volumes and revenue margins plummeted in some West and Central African markets (large, high-margin markets for CAB) after Central Bank interventions in their forex markets. Swift action followed: CAB has a new CEO, CFO, COO, CRO, Head of Banking, Global Head of Sales and Global Head of Payments - all very high calibre.
A new strategy recognised over-concentration in some markets and now aims to diversify geographies, clients, and products; stabilise income; make growth more sustainable; and raise operational leverage. Costs have also been cut.
Our fundamental value is 90p / share, using a DCF model. CAB's share rating looks extremely low compared to banks with far lower growth prospects.
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