Analysis from the 11/02/2021 calling 43c per share and on the 12/02/2021 the share price hit a new ATH of 42.5c
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To our knowledge IOU is only operational in Malaysia and soon Indonesia. We know from various articles etc that EasyStore has 5000 out of the 7000 merchants in Malaysia or roughly 60% of merchants.
Also according to various reports from the region, basket sizes are increasing on average 20%. Lets call this the Transaction Value Increase (TVI)
For crude analysis I would take 60% of the revenue generated by EasyStore which would only count Malaysian merchants
Revenue from Malaysian Merchants ($435m x 60% = $261m)
Add TVI: $261m x 20% = $52.2m = ($261m + $52.2m = $313.2m)
The calculations above indicate that $313.2m revenue could be generated by EasyStore based on the addition of IOUpay. As per the investor presentation from September 2020, we know that IOU margins are between 2%-4%. In my calculations I work off the mid range at 3%.
$313.2m x 3% = $9.39m
Based on my calculations I estimate that IOU would make $9.39m in revenue from the partnership with EasyStore. My share price calculation is on revenue calculated by combining annualised current digital transactions reported by IOU in the most recent 4C (December Qtr) which is approximately $8.8m with the potential revenue from the EasyStore partnership which is $9.39m.
$8.8m + $9.39m = $18.19m revenue.
I'm using a price to sales ratio (P/S) of 20
Valuation
$18.19m x 20 = $196.6m
*450m shares on issue
$196.6m Market Cap which equates to approximately 43c per share.
Discussion
The analysis above is only taking into account current digital transactions annualised without consideration of increased growth. The numbers only account for a partnership with EasyStore and we're aware that other partnerships will be announced. My personal target for the share price is $1.80 which would require the company to reach a market cap of $810m based on the current number of shares on issue. Also note that the calculation of revenue is a crude value averaging total revenue divided by all merchants and then taking 60% of the total based on the number of known merchants in Malaysia. It is unlikely that every merchant would be 1:1 as some merchants will process a lower number of transactions and this could dramatically alter the values used.
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