PIL Facts & Progress - A new Thread, page-78

Hi NM, I might jump back in just to respond to this as you raise a good point - peer comparisons. However for this to work I think you need to pick your 'peers' very carefully. Interesting that you mention CRO - that's one company with quite a few red flags for me (the whole 'Appstablishment' deal doesn't sit well - the MD of Cirralto basically bought a company he co-founded, and was a significant holder in... all a bit weird. Doesn't pass the pub test. Plus their recent Trading Halt, 'material revenue' announcements, and subsequent wrist-slap by the ASX was a debacle).

Anyway, the main thing you raise is determining whether PIL is undervalued, by looking at peers. The trick is, who is PIL's true peer? Is CRO a fair example? Aside from the fact CRO are trying to develop a microlending product, they seem like totally different companies operating in very different sectors, at least from my view. CRO are effectively offering various B2B transaction/payment services (but they are looking to get a warehousing facility set up for the lenders book... perhaps a hint as to the way PIL would have to go if theirs does take off).

Since you raise CRO in respect to PIL, personally I think the former's market cap of $213m is way overvalued. Just look at the numbers in their latest 4C:

• -$988K current cash burn, although they have $21.3m in the bank so there is, in theory, 22 quarters of funding left - a much longer runway than PIL. But the cash pile is thanks to the $18m Capital Raise they did in February. Yet reading the recent Quarterly Activities report, it's written in such a way as if to suggest the cash position is because of their revenue growth (another red flag). See page 7 of the announcement, 'Financial Position'. Always look out for companies that conflate information like this. Their cash pile has nothing to do with their revenue growth (at the moment).
• They have the same cost blowout problem though - combined staff/admin costs for the 12 month period was -$3.64m, verses Customer receipts of just $1.0m.
• The good news (I suppose) for CRO is that customer receipts are growing slowly, they've been on an upward trend for the whole of FY21. But it's still fairly low, i.e last quarter was just $334K, up 14% from prior quarter. That's moving in the right direction. PIL need to turn this around.
• However they've also got nearly 2.9 billion shares on issue.

Coming back to PIL, $22m does seem low overall but compared to whom? I don't know the answer; perhaps others can provide some thoughts on who PIL's true peers are - but don't just fall into the trap of including 'Fintech's or other ASX-listed BNPL players etc. The peer actually needs to be doing - or trying to do - the same thing as PIL (even if in a different geography).

Cheers
m