'Payments buy will boost Altech'

Johannesburg - Analysts have given IT group Allied Technologies (Altech) the thumbs-up as its latest acquisition continues to expand the company's business offering.

On Thursday, Altech acquired a majority shareholding (50% plus one share) in electronic payments processing firm NuPayayment Solutions(NuPay) for R53.5m.

"The company (NuPay) definitely fits in Altech's current business model and will diversify its service offering," said Frost & Sullivan ICT analyst Lindsey McDonald. "If NuPay affects Altech's business, it would be in a good way."

NuPay develops, maintains and markets its own products and services within the electronic transaction environment, particularly debit orders.

"The acquisition makes sense since it complements Altech's card division," said McDonald.

"No matter where you go these days, you can pay with debit cards and credit cards," said Vestact analyst Sasha Naryshkine.

"Perhaps the rollout of communication infrastructure will result in a further drive towards electronic payments. I could see why Altech would make this purchase."

Despite the company's 42% decrease in cash and cash equivalents from R1.5bn to R911m for the year to end-February 2009, McDonald believes Altech can afford its latest acquisition.

"Altech's acquisition strategy is a natural part of its business model. Since it doesn't have any financial problems, it can go ahead," she said. "NuPay is an annuity business so Altech's revenue base is likely to increase anyway."

By midday on Wednesday, Altech shares were trading 0.1% down for the day at 5 694c.

- Fin24.com