Archive for February, 2010

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Posted by Dan Hung

at February 28, 2010

Buy viagra plus without prescription, It's been a while and for that I apologize. Truth be told, viagra plus uk, Order viagra plus from us, I had gotten my portfolio almost fully invested by mid-last year. And, viagra plus no rx required, Order viagra plus on internet, as the stock intense rally we've seen in stocks through 2009 has turned flat since the new year, I've been much less aggressive with my personal portfolio and as such have had a lot less to say, cheap viagra plus no rx. Buy viagra plus no rx, Though, for those of you who follow my Covestor account, pharmacy viagra plus, Order viagra plus no prescription, you'll know that I have not been completely out of the markets. I'm increasingly interested in companies which do the bulk of their business internationally as I believe this is a good way to capitalize on foreign growth while being constrained with access only to U.S, cheap generic viagra plus. exchanges, buy viagra plus without prescription. Viagra plus in bangkok, (By the way, does any know any good online brokerages which allow you to trade stocks internationally?)

Universal Electronic Payment System (UEPS)
UEPS is a financial transaction system offered by Net1 which utilizes its patented Funds Transfer System and secure smart cards to provide real-time but offline payment solutions for un-banked/under-banked populations, cheapest generic viagra plus online. Overnight viagra plus, These cards store all necessary information - available funds, user identity, viagra plus price, Viagra plus online, etc. - and allows for transactions to take place without a connection to a host mainframe, buy viagra plus once daily. Viagra plus from india, As such, the cards are particularly useful to countries with under developed infrastructure, viagra plus sales. Buy viagra plus without prescription, As you may have guessed, Net1 does most of its business in developing countries, primarily South Africa, where it provides cards and point of sale equipment to governments which use the cards as a medium to distribute grants and other social welfare payments. Buy viagra plus overnight delivery, Investment Strengths

Proven, cost effective technology serving a large niche - Unlike traditional debit cards or credit cards, viagra plus tablets, Order cheap viagra plus online, UEPS offers a proprietary technology which does not require always on connection to a primary host or even a bank account. Data is stored on the card and information transferred at the point of sale.

Adoption reaching critical mass - The Company has long been used by the South African Social Security Administration to distribute entitlement payments to citizens and Net1 has recently leveraged this success into a national contract with Ghana as well as a roll out of its technology in Iraq.

Operating leverage and free cash flow generation - The Company's equipment and cards are generally paid for by national governments which have chosen its system, viagra plus for sale. Buy no rx viagra plus, Further, as additional customers are enrolled and begin using their cards for payments, viagra plus cheap drug, Buy viagra plus generic, the Company generates incremental transaction fees without significant incremental investment. Operating margins in the transaction processing segment are near 60%.

Investment Risks

Exposure to South African Social Security Administration Contract - 65% of revenues are currently generated through five provincal contracts with the SASSA, buy viagra plus online cheap. This contract has been on one-year renewal terms for the last three years as SASSA attempts to bid the contract through a formal RFP process, buy viagra plus without prescription. Viagra plus overnight delivery, The last RFP process ended almost a year ago without a resolution and Net1's current contract in South Africa is set to expire on March 31, 2010.

Exposure to South African Rand - The majority of the Company's costs and revenues are denominated in South African Rands, buy cheap viagra plus. Viagra plus online review, While exchange rate fluctuations will not have a major impact on cash flow or liquidity, it can have a significant impact on valuation for USD investors, viagra plus online pharmacy. Buy viagra plus pills, The Rand is currently trading at 7.65 per USD and has traded in a range from 6 to 12 historically.

Political Risk - The Company's growth plan relies on entering developing nations with sometimes tenuous governmental structures.

Technological Risk - While the Company's smart cards and other payment technologies appear to be quite forward thinking, the increasing availability of wireless communications infrastructure and cell phones poses a potential disruptive threat for a motivated competitor.

Quick and Dirty Valuation
Despite guidance of 20% yoy growth in EPS (constant currency) and long term catalysts for significant growth through new market entry internationally, viagra plus without rx, Viagra plus information, the Company trades at 12.0x P/E and, in fact, viagra plus from canada, No prescription viagra plus, represents a significant discount based on my analysis of PEG which has traditionally approached 1-1.2.

Further, find viagra plus, Cheap price viagra plus, for a smaller, growing company, order viagra plus online, Cheapest generic viagra plus, UEPS generates significant free cash flow. Buy viagra plus without prescription, As defined as operating cash flow minus capital expenditures and investments, the Company has averaged approximately $110 million in free cash flow over its 2008 and 2009 fiscal years good for a 13.75% free cash flow yield. Put differently, buy viagra plus from us, Purchase viagra plus no rx, at no growth and a 10% discount rate this would justify a stock price of ~$24.00/share vs. its current price of $17.65/share. Obviously, with significant headline risk involved in the Company's 65% concentration in South African Social Security payments, this discount rate may not be appropriate.

The Company, however, currently has ~$2.00/share in net net working capital and $3.35/share in cash on hand and management has shown a willingness to redistribute value to shareholders having recently approved a $50 million share buyback to be funded entirely from cash on hand. Netting the entire value of cash out of the shares, the Company's cash yield would actually be closer to 17%, enough to pay back shareholders in less than 6 years if fully redistributed. Is this worth the risk of annual renewals of the South African contracts. I believe so.

Full disclosure: Author is long shares of UEPS at the time of writing..