It's rare for World Bank to release remittance data, but when it does - we suddenly acquire new data points that can further reinforce or, on the contrary, overturn our theses. In this case, we have further evidence that the money transfer business is alive and kicking, which is a very strong read for Euronet Worldwide.
Basic Business / Product Analysis:
Euronet is an electronic payments provider that focuses on three core business segments: EFT processing, epay, and Money Transfer. EFT Processing Segment processes transactions, with an outreach to the network of 40,000+ ATMs and nearly 300K POS terminals across Europe and Asia. The epay business provides distribution and processing of prepaid mobile airtime and other electronic content . Finally, the Money Transfer Segment focuses on C2C (consumer to consumer) money transfer services, under a number of brand names, such as Ria, AFEX Money Express, and IME.
Below, we summarize World Bank findings and also discuss their impact on Euronet's business:
Remittance flows to low- and middle-income countries (LMICs) are projected to grow 4.7% for the full year of 2019, which signals a very similar trend for 2020 (usually within 50 bps band). Given the level of Euronet's pricing, we would expect at least double digit revenue growth for the company's Money Transfer segment. As a rule, as long as remittance flow grows by at least 3%, we can count on double digit top-line traction for EEFT.
Top five countries that receive remittances are India ($82.2 billion), China ($70.3 billion), Mexico ($38.7 billion), the Philippines ($35.1 billion), and Egypt ($26.4 billion). There is a vast untapped opportunity for Euronet, since each of the five countries has Western Union and MoneyGram as its top money transfer clients, yet both companies are losing market share in all countries, (ex-Egypt).
The top 5
