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Universe Group – another operational update… but sufficiently reassuring?

By Steve Moore | Monday 12 March 2018

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.

Having slid below 6p last month, shares in point of sale, payment and on-line loyalty systems group Universe (UNG) are currently at 6.625p on the back of recent newsflow…

Today is an announcement that the group is “delighted” to reach a milestone of installing its next generation point of sale, back office and head office solution on to the 70th site for petrol forecourt operator Rontec. It noted “site acquisitions have driven strong growth in recent years with Rontec looking to improve their retail management systems in both the forecourt and the stores”. This follows an announcement last week of “an agreement with NetPay Merchant Services Limited to offer their acquiring and on-boarding solutions to the group's retail clients”.

That saw Universe emphasising that it “complements and broadens our existing payment services, allowing us to be the single payment counterparty for our retailers” and “the first clients are expected to be on-boarded in May”. In the meantime, however a 2017 results statement is awaited.

The shares have declined from more than 11p in the Summer as first it was “trading performance for the full year will be weighted towards the second half” and then later as warned, profit warning.

That saw the shares down to 6.375p in November – and me conclude I continue to consider there potentially good long-term value here, but await the company to more reassuringly announce before considering moving from a watching brief. I don’t regard the latest announcements as so reassuring – with they not including any financial detail or updating on present overall performance.

It is the latter and outlook statement I’ll particularly look for in the results announcement and, currently without this further detail, continue to consider this presently at best for watchlists.

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