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Universe Group – a roll-out commencement reassuring following interims? Er…

By Steve Moore | Thursday 12 October 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Point of sale, payment and on-line loyalty systems group Universe (UNG) has announced it has commenced the roll-out of its new Gempay 3 payment solution to fuel forecourts – and the shares have responded more than 5% higher. So, good news following recent interim results concern?

Positives include it noted that “the distinctive landscape media screen and shielded keypad have been well received by our retailer clients wanting a modern, robust interface for their customers” - with first customers including MRH, Certas Energy, Rontec and Valero and that “the introduction of a colour touchscreen on the Gempay 3 opens the scope for enhancements such as the delivery of advertising, served out of the cloud by Universe's Iocaste digital media suite”.

However, the half year results concern was a more than usual dependence on a small number of high value projects in conjunction with delays having already been experienced. The latest announcement includes; “Separately, the company continues to work to sign and deliver the small number of high value contracts referred to in the Interim Results announcement. Further announcements will be made in due course”.

“Separately” emphasises this a distinct issue from the noted Gempay 3 roll-out – and this is further emphasised by house broker finnCap, which states that the roll-out should drive growth in payment solutions revenue as customers refresh their estates and also offers an opportunity to win new customers but that it “does not relate to the “small number of high value contracts” referred to at interims. We therefore await further newsflow in this regard”. Despite this, the broker has to-date maintained forecasts for full-year earnings per share of circa 0.90p (2016: 0.79p), rising to around 1p next year.

This latest still thus means I have profit warning fears here – and the market also looks to remain somewhat sceptical; a sub 8p share price comparing to 12p reached in June and nearer 9p prior to the results announcement. This does also mean some potential value attraction – but I currently continue to monitor from the watchlist and avoid the shares.

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