FTSE 250 newbie CAB Payments shares plummet 70%

CAB Payments shares lost nearly three-quarters of their value on Tuesday after the fintech group slashed sales expectations.

The payments group, which listed in July at 335p a share, told investors full-year revenues would come in at 17 per cent below previous forecasts as a result of a heavy slump in Nigeria’s naira, volatility in other currencies and uncertain market conditions.

CAB Payments shares were down 73.2 per cent to 58.1p on Tuesday morning, bringing losses since its IPO to almost 80 per cent.

The money transfer group said ‘recent weeks’ had seen ‘a number of changes to the market conditions’ in some key currency corridors, which is ‘reducing’ trading volumes and ‘compressing’ margins.

The Nigerian naira is down more than 40 per cent against the US dollar this year, reaching a record low earlier this month, as the country’s shortage of greenbacks continues to weigh on the currency.

It has been in free-fall this year, worsened by the decision to lift restrictions on its official market trading in June.

CAB Payments warned investors ‘it is unclear when and to what extent conditions in these markets may improve’, prompting it to slash revenue expectations.

Group revenue for 2023 is still expected to be ‘at least’ 20 per cent head of 2022, when the company raked in £109.4million.

CAB Payments said: ‘The company will be seeking opportunities to lessen the impact on group profitability in 2023 through cost reduction measures and efficiencies, but any actions will be tempered by its ongoing confidence in the medium-term potential of the business.

‘Therefore, the Company anticipates that the majority of any revenue impact will flow through to the bottom line.

‘Should the current market conditions persist in some of our key currency corridors, as described above, the softer exit rate from 2023 could result in 2024 revenue growth falling below the medium-term potential.’

The update marks a reversal of fortunes, with CAB Payments’ boss in September cheering an improvement in market conditions.

But the group is still confident of its medium-term outlook, having signed 74 new customers so far this year.

CAB Payments said: ‘While the Company is disappointed with recent market volumes, CAB Payments remains confident that the trends within the business-to-business cross-border FX and Payments market continue to be supportive.

‘The Company has a well-managed cost base and focused investment plans, remains highly profitable and continues to generate significant free cash flow, which will be used to invest in the business and reward shareholders going forward.’