Shares in mobile phone top-up specialist E-pay Asia rang up gains of more than 15% following strong Q1 results for 2006. The company, which provides in-store, ATM and SMS mobile phone credit top-up facilities throughout South-East Asia, boosted its 2006 earnings forecast by 20% to £2.5m.

This constitutes a huge turnaround for the company, formerly SkyNetGlobal. Off the back of an 88% rise in revenue from Q1 to £56.8m, strong growth seems set to continue as electronic top-up begins to catch on and the dominant scratch-card phone credit culture recedes.

This is a likely outcome for pre-pay mobile phones throughout the region, as was seen in the UK. The benefits of installing one-off top-up terminals over producing individual scratch-cards are significant in terms of costs and also convenience for the company and end-users.

Indeed, figures for the past twelve months reflect this, showing sales increases of an average 21% per quarter and steady profit growth - Q1 EBITA rose 156% to £1.23m compared to the previous year. The preference for cash transactions over credit card use throughout South-East Asia, means that the majority of mobile users subscribe to  pre-pay services rather than contractual mobile agreements. A convenient method for mobile credit top-up is long overdue, especially in areas where retail outlet infrastructure is weak. SMS top-up provides just this. Managing Director Simon Loh also assures that the firm is actively developing online top-up methods to compliment existing systems.

E-pay Asia is now thought to have one of the largest electronic payment networks in Asia and boasts 70% of the top-up market share in Malaysia. With mobile phone use expected to grow at 20% per annum across the whole region until 2007, E-pay should see growth continue.

Analysts from house broker Hoodless Brennan predict 2006 earnings of 1.3p, ahead of 1.75p for 2007, placing the shares on a forward p/e of 14.4, falling to 10.8 for 2007. As dividends are likely this year and next, e-pay is definitely worth a look.

E-Pay Asia	AIM	0pm	p	p
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