Hi All, Just looking through this quarterly in more detail and...

Hi All,

Just looking through this quarterly in more detail and from what I see, I think company is headed in the right direction. Now talking about the elephant in the room first – which is the PPI stuff and why that didn’t yield the revenue numbers we were all looking for in this period – my view on that is a simple one in that management would have deemed it more prudent to not deploy funds in those efforts at this point in time, but instead leave it open to be spent and deployed on the BNPL expansion in SEA which really is what institutional investors would be viewing as the prize. Think about it from management’s point of view when they initially raised the $50m with investors – they would have told investors a very clear message that those funds will be used purely to build its BNPL presence in SEA, through first mover advantage, start to ramp merchant access, get customers onboarded and then slowly do the same in other regions and build scale in SEA. That’s the prize. None of those investors would have been asking what their thoughts were on driving PPI as high margin as that is, its not what investors would have given money for. It’s all about BNPL expansion in SEA and the valuation opportunity that brings if they can execute on their plans.

If they can do what Afterpay and Klarna have successfully done in Aus, US and EU in South East Asia – then we know that immediately this business would be valued in the billions at multiples of what it trades at today. We are still only a $248m market cap company, with $54m in the bank and a massively fragmented market in SEA ripe for capturing (by multiple players mind you). So for them deciding against deploying the money for PPI etc means that they are actually holding true to their commitment in building out BNPL effectively, given they know it’s a timing thing in being able to capture a chunk of that market as quickly as possible.

Look at some of what they’ve said too in their announcement which I found relevant:

1. Focus on accelerated merchant onboarding ,prioritizing high volume and premium yielding merchants across key industries : This makes sense as you are likely to get the largest net transaction margin focusing on these merchants first, as well as a strong customer base given there is likely repeat usage from customers with these specific “high yielding merchants”.

2. Completing soft launch in February to May,and then a “large scale scheduled rollout of the Merchant app to priority merchants(already identified) for “immediate onboarding of customers” . SO THIS is what we’re looking for and what we’ll be able to see traction on as they give us updates on ramp in the next quarterly (but likely only one month of 4Q) and then ongoing as they ramp merchants and customers. It’s actually smart how they’ve tested this out with smaller merchants, ironed out the issues etc faced and ready to fully launch it in June , with the marketing war chest behind them. By the way, this is EXACTLYwhat Afterpay and Klarna did when they were starting out.

3. 75,000 unique merchant targets: So they revealed that from the initial 85,000 merchant targets across ipay88, easy store and MYP1, there was an estimate of only 10k duplicates, leaving their target unique merchant access to 75,000. That’s MASSIVE again. I’ve shared this before, but let’s put it into context again what that means:

· Afterpay: 85,800 merchants (mkt cap: $34.8bn)

· Zip Co: 45,300 merchants (mkt cap: $4.59bn)

· Sezzle: 34,000 merchants (mkt cap: $1.75bn)

· IOU: 75,000 merchants access (mkt cap: $248m)

Now just look at what the potential is once they start to get customer and merchant traction with their offering.

All of the above is a massive positive for the company, and let’s not forget that they have $54m in the bank, and ready to go with deploying this properly come June. June is 1 month away. I just think investors would definitely want to be there for the ride on this one once they start reporting those traction numbers – because you can bet your bottom dollar that if they get even a small % in traction of what the opportunity lies ahead (which is what all the institutional investors on the register as well as those on the sidelines are watching for), this company easily has what it takes to be a multi billion dollar company in rapid time. This is a course we have seen before with all of those BNPL players above.

So for investors disappointed in the quarterly announcement because they wanted a larger revenue number driven by PPI – I say look further ahead than that. Don’t make the same mistake investors make and sell out on a static quarterly result, only to see it rally on the back of strong fundamentals being announced. Remember - we are only 1 month away (June 2021) before hard launch of merchants on the BNPL product, customers being onboarded, further strategic merchant agreements being announced etc. Once we start to see traction on all of that, this thing will get re-rated quickly and sharply and with that, further institutional backing and potentially larger strategic stakes (NTT Data Corp being an obvious play here in my opinion).

As always, just my own opinions but trying to put everything in context.