Ann: March Quarterly Activities Report, page-217

Still so much negativity about management.

Their bad debt performance is *very good* as a starting point. Yes, they sugar coated it, or possibly misinterpreted. Yes, they have done things that are concerning to investors.

Credit cards and general credit spending are considered problematic by the Malaysian government and they have taken expensive steps to fundamentally hinder interest bearing loan providers. See : https://www.propertyguru.com.my/property-guides/bank-negara-malaysia-loan-financing-deferment-covid-2020-24230

One interesting point of this article was that debtors could claim hardship for 6 months without any supporting documentation. That is a biiiiig deal, it would have cost lenders significantly. And so there is probably blood in the water and that the government is willing to do this would make the types of people who invest in lending in general somewhat wary.

With these types of things in mind, I feel that IOU management cannot explicitly state what their goal is (to take peoples money in fees instead of interest - practically they have a "quantity, not quality of sale" model) because there is a degree of politicking. In Aus, for example, Douugh can get away with slinging mud publicly at "non responsible" lenders. I don't see Malaysia as having that same freedom of speech especially not from a relatively small fish like IOU.

It's a *good thing* that they ran out of money for BNPL. It means the product is in demand, you see? I think that's a pretty conservative move by management. They could have just done a cap raise - which would have seen as even more desperate and crazy if we didn't have these figures.

I see the roadmap for BNPL as : Prove we can make money, prove we don't lose money, then onboard an external lender. I think they want to prove that they're a sustainable, low risk investment.

And what is one of IOU's stated goals? Providing banking to the under banked. How do you get people into banking, you need a benefit. Small credit like this is a *huge* grabber. We know from Australia that Afterpay definitely offers credit to the non-credit worthy. It's new markets.

See also ; https://www.bis.org/ifc/events/ifc_isi_2017/06_abdrahman_paper.pdf

Yes, IOU doesn't own anything tangible. But they're relatively tiny! People expecting them to gain a digital banking license are kind of crazy, again, tiny tiny company. Boost has about 15 million plus users. IOU has what, 25k?

Despite being small, they're still building things - a digital banking IT framework, a model for marketing BNPL in Malaysia, and a BNPL lending policy that so far seems to be actually profitable.

That's what you're investing in with this company. I mean can anyone here judge how well their digital banking software integrates with other banks? How reliable it is? No. But we can say that their marketing is working, since they have demand so great they ran out of money. They're also good at credit risk management, since they're currently tracking at 0.6% bad debt. As I said, I work for a small finance company and that is excellent performance particularly on such a high transaction amount - we're tracking at a much higher rate of loss than that and we don't do anywhere near 6 million AUD a quarter. Also see : Zip lol


Here's my prediction, which I'll formalise ; if their bad debt cumulative total for BNPL next quarter is somewhere within double this announcement, they will not have a problem getting funding for BNPL, and subsequently they will experience massive growth.

I do however think there is a good chance they do a cap raise within the next 4-8 weeks to keep the ball rolling to next quarter, and so I would not buy at this time.