Trintech sales to increase, says Davy

TRINTECH can look forward to a pick-up in sales in its key markets, according to new research from Davy stockbrokers.

Davy is upbeat about Trintech’s future after it issued its third-quarter results last week and said it expected the company to be near breakeven by 2005.

Trintech is trading at a discount to its peer group, even though its share price was up over 140% in the year to date.

Trintech was cashflow positive in the third quarter and results exceeded Davy’s expectations. Better than expected hardware revenues, declining sales costs and improved management of operating costs were the main factors behind the performance, Davy said.

Davy adjusted its forecast loss per share for next year from 26 to 6 cent as a result of projected increases in revenue, particularly from licensing, which it said were likely as a result of Trintech’s €4.2m acquisition of Dataflow, an American firm, earlier this month.

Dataflow produces software that can be used in conjunction with Trintech’s ReconNET cash reconciliation product. The firm employs about 40 people and is based in Dallas. Employment numbers at Trintech will rise to over 350 as a result of the acquisition.

Trintech generates revenue from three key divisions, which are licensing, hardware and services. Fifty-three percent of sales come from Europe, the Middle East and Asia, with 45% from the US and 2% from Latin America.

Davy said its forecasts could be upgraded further following Trintech’s fourth-quarter results, if there was evidence that the top-line sales growth seen so far was sustainable.

Davy said the outlook for demand for Trintech’s products was improving and that the company’s third-quarter performance would have been even more impressive if the euro’s volatility had been less pronounced.

Trintech stands to benefit from the rollout of so-called “chip and PIN” technology across Europe. Chip and PIN aims to combat credit card fraud by moving away from signature-based credit card transactions.

Card users will instead key in a PIN, in the same way as using an ATM, when they use their card in retail outlets. The system has already enjoyed considerable success in France and will be introduced to Ireland next year.