Ann: Half Yearly Report and Accounts, page-38

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Zingy

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01/03/23

22:43

Post #: 66549365
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Originally posted by mondyinvest: ↑

You appear to be the only one on this thread actually discussing the numbers. A few thoughts from my side:

Agree that narrowing the loss by 64% is nothing to be sneezed at, they have done well there considering the lack of growth overall
I am still bemused at the staff numbers; they've increased this further to 135 staff and when you look at why they've increased it, it is not software developers as DanMachine wanted to believe, but rather "business development, account management, operations, collections and credit teams". This continues to suggest to me that the business is not scalable like a tech business should be. You can get the same sense from the section titled "Merchant Acquisition" on page 4 where they clearly state that they have been doing in-person marketing and account management calls. Again, this is not scalable like a tech company if that's how they are going to operate, and it explains the relatively high spend of staff costs verses their actual BNPL income. If all these people are supporting BNPL in-country, how are they going to fund a launch in other countries?
If IDSB six-month revenue was A$5.46M and profit after tax was $2.17M those are nice margins. They're paying out an $1.43M dividend which is a payout ratio of 65%. When it's all finalised, IOU's 34% holding in IDSB for $23.3M suggests IDSB is worth $68.5M on a 100% basis. If they have an identical half to the one they just had, that'd be annual profit after tax of $4.34M. The Malaysian corporate tax rate is 24% so this figure is equivalent to $5.7M profit before tax (PBT). When IOU first agreed to invest in IDSB, it was on the assumption they'd do ~$10M PBT and they were paying 10x PBT (i.e. paying $42M for 42%). Based on current run-rate, IDSB has got more expensive - it's worth $68.5M but is doing just $5.7M PBT (annualised) so that's a 12x multiple. But hopefully with the loan moratorium over, they can have a very strong second half. If they can grow that, and the dividend payout ratio stays high, it will definitely help.

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Fair summary.

I am however not surprised by the staff numbers and their rational. It appears to me that iou is working in fairly old tech markets and business communities thus heavy in personnel vs other comparable tech firms in more advanced business and consumer markets.

That said it seems that the margin on BNPL lending has shown to be rather healthy so now all that is required is scale through funding, but naturally all holders want this in place yesterday but in reality this local market and banking segment wants old school runs on the board so it will take time but it’s so close now you can smell it.

Thanks
IOU Price at posting: 5.3¢ Sentiment: Buy Disclosure: Held
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