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Harvest continues to outperform IPO expectations


The Group’s latest FY20 interim results, in addition to the positive FY19 results, illustrate that Harvest has once again exceeded IPO expectations, not only in terms of revenue and profit generation, but also in relation to dividend distribution.

It is worth highlighting that in the face of such an unprecedented pandemic, where we are currently seeing other companies decreasing or completely halting dividend payments for the current financial year, through its robust business model, Harvest distributed a dividend for H120, which is in excess of IPO expectations.

In light of the current interest rate environment, we deem the Group’s current net dividend yield of 3.7% as attractive. We also believe that through its resilient business model, the Group has sufficient internal capability to maintain such dividend offering and even improve it moving forward.

The positive results reported in the Group’s FY20 interim results were mainly driven by a strong performance of APCO Systems Limited through its growing client base in terms of its payment solutions services.

We are therefore aware that the Group’s improved financial performance is reflective of the fact that contactless payments are becoming the norm in such an environment, and as consumers become hesitant to carry and handle cash, companies need processing partners who can serve merchants’ changing needs, even across industries that are currently being decimated, such as travel, hospitality and restaurants.

We believe that Harvest is uniquely positioned to assist such companies make the necessary changes to survive this pandemic, and even thrive in a post-COVID-19 world.

Moreover, the Group’s results were also positively impacted by the overall good performance of PTL. During H120, PTL’s business was strengthened by the commencement of its international project in Mauritius where the company is now in an advanced phase regarding the installation of that country’s border security system. We deem such project as pivotal to the Group’s financial performance and to Harvest’s ability to attract additional business both locally and abroad moving forward.

Of note, the conclusion of the Group’s Mauritius contract is expected to further boost Harvest’s financial standing going forward.

However, although the pandemic’s impact on Harvest’s financial and operational performance is still not fully known, and whilst the current situation remains relatively fluid, management reported that pursuant with Harvest’s healthy pipeline, the Group’s outlook remains cautiously optimistic.

Nonetheless, despite the fact that the Group managed to improve on previous actual results and on budgeted figures, management reported that such events might still have an impact on the Group’s performance and financial position in the future due to any unforeseen effects that such pandemic might have on the economies and industries.

In view of the above, we believe that the shares provide investors with an attractive entry point into a company that offers exposure to a Group of companies within the technology sector in Malta, and which is poised for further expansion in other countries. As a result, we believe that the Group has the ability to continue on its current growth trajectory and deliver on the declared expectations and beyond as witnessed through the Group’s recent results.

Despite our positive outlook on the Group going forward, we are cognisant of the fact that the shares are illiquid and this could result in a wide bid/ask spread.

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