Our opinion on the current state of CTA

Capprec (CTA) is a fintech company offering payments and payment infrastructure as well as software and services. Patrice Motsepe's African Rainbow Capital (ARC) owns a stake. The payments side of the business is done through African Resonance and Dashpay. The software side involves systems development and consulting. The company owns 17,5% of Resonance Australia - a startup business. The company has all the major banks in South Africa as clients. In its results for the year to 31st March 2023 the company reported revenue up 19,7% and headline earnings per share (HEPS) down 44,5%. The company said, "Continued growth in terminal estate, up 18% to 328 000 - Strong growth in Payments' annuity income, up 24.1% - Expected credit loss provision raised of R70.8 million for loan to associate, GovChat, impacted on EPS and HEPS". In a business update for the six months to 30th September 2023 the company reported, "There has also been a tendency to prolong the productive life of customers’ payment terminal fleets and defer capital expenditure into future periods. Despite these headwinds, the Group is strategically well-positioned in a growing market and has made good progress in gaining new customers, diversifying its revenue streams and increasing its market share". In a trading statement for the six months to 30th September 2023 the company estimated that HEPS would increase by between 103,8% and 107,9%. The company said, "The GovChat expected credit loss raised of R56.3 million in the prior period, compared to only R9.4 million in the current period, has contributed to the increase in comparable earnings". The share now trades at a P:E of 15,99 because of the substantial loss provision made. Roughly R500 000 worth of shares change hands each day - which makes this share quite feasible for private investors. The company appears to be well-managed, profitable, and cash-flush - which means that it is beginning to attract institutional interest. Technically, the share has been in an downward trend since January 2022 and we advise waiting for a break up through its downward trendline.