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CAB Payments shares plunge 74% after forecast slashed

CAB Payments Holdings (LSE: CABP), a recent addition to the FTSE 250, saw a significant slump in its share price, plummeting by 73% to a dismal 58.83 pence per share on Tuesday morning. The dire …

CAB Payments Holdings (LSE: CABP), a recent addition to the FTSE 250, saw a significant slump in its share price, plummeting by 73% to a dismal 58.83 pence per share on Tuesday morning. The dire performance came as the company issued a cautionary statement regarding its annual revenue due to challenging market conditions in vital African currency corridors.

CAB Payments Holdings now anticipates that its annual revenue will surpass the £109.4 million achieved in 2022 by ‘at least’ 20%. While this may seem like a robust figure, it represents a considerable deviation from previously issued guidance, amounting to approximately 17% below the original expectations.

The major brunt of this revenue impact is expected to be borne by the company’s bottom line. Despite the adverse conditions, CAB Payments Holdings is actively seeking opportunities to mitigate the financial fallout.

Elaborating on the situation, CAB explained, “In recent weeks, the company has witnessed a series of market changes in some of its key currency corridors. These changes, coupled with ongoing uncertainties surrounding the naira, are affecting both volumes and margins. Most notably, the Central African franc and West African franc are under duress. Presently, these market conditions are squeezing margins and curbing trading volume.”

The naira, Nigeria’s currency, faces particular turbulence, while the Central African franc is utilised in Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, and Gabon. The West African franc is used in Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

CAB emphasised, “These challenges are recent but ongoing, and they coincide with the traditionally strong fourth quarter for both of these corridors. It remains unclear when and to what extent conditions in these markets may improve.”

Notably, the firm has inked deals with 74 new customers in 2023 and is optimistic about its growth potential. However, persistent adverse market conditions in critical currency corridors could jeopardize revenue growth in 2024.

Despite recent disappointments in market volumes, CAB Payment Holdings remains confident in the “business-to-business cross-border FX and payments market,” which continues to provide robust support.

The company asserted, “With a well-managed cost base and focused investment plans, we maintain our profitability and generate significant free cash flow. This will be used to invest in the business and reward our shareholders in the future.”

CAB Payments Holdings initially went public in July at 335 pence per share, but it has since experienced a substantial 82% decline in its stock price. Its inclusion in the FTSE 250 index, as of mid-September, marked a significant milestone for the firm despite the recent market challenges.

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