PIL Analysis, page-3

Apologies all, revision to above based on prior incorrect calculations:

Forecast

PIL is targeting revenues of USD$50m over the first 5 years of operations. EBITDA targets are unknown, although the established M-Pesa of Safaricom, which operates a mobile money service in Kenya, achieved an EBITDA margin of 40% in the most recent financial year. Given that PIL is likely to have a low regular cost base, centred primarily on staff costs, marketing, and product support and development, an EBITDA margin of 40% does not seem unrealistic. Applying this EBITDA margin would result in a target EBITDA of USD$20m over the first 5 years of operations. Based on a constant growth rate of 50% YOY, this would see an EBITDA margin of USD$1.52m in the first year of operations, with USD$7.68m in the fifth year of operations. Applying an EV/EBITDA ratio of 12, this sees an EV of USD$92.16m at the end of the fifth year – a 649% increase on the current assumed EV of USD$14.2m (based on current market cap of USD$11.88m, cash of USD$2.83m, raised via IPO, and debt of USD$0.51m).

@TRKA - The mobile money and banking industry is ripe for a global player to consolidate the industry; an operator which provides intra- and cross-border remittance and payment services. This would obviously impact on market share of market players that focus on local rather than global. In this regard, PIL does not appear to be ambitious enough with its growth intentions with its gradual market entry approach.