SoPa stated that 2023 revenue run rate can be $60 – 100 million and it expects to reach cash profitability sometime in 2H 2023.
Ascendiant Capital Markets initiates equity research coverage on Society Pass Inc. ( SOPA), Southeast Asia’s (SEA) next generation, data-driven, loyalty, fintech and e-commerce ecosystem.
• Strong 2Q 2023 Revenue Growth: SoPa reported its quarterly financial results on 10 August with 2Q 2023 revenues totaling $2.2 million, representing a 338% y-o-y.
• Major M&A: Announced in July 2023, the Company entered into an agreement to acquire 95% of PT Inetindo Info (“Inetindo”), a wholly subsidiary of Story-I Limited (“Story-I”). Inetindo is a leading Indonesia-based Apple Premium Reseller and Authorised Education Partner as well as an electronic gaming retailer for several different gaming companies. The purchase price is ~$1.9 million and the deal is expected to close by September 2023. Ascendiant notes that Inetindo’s annual revenue of ~$30 million will be a significant contributor to Society Pass results going forward.
• Significant 2023 Revenue Growth and Expected Cash Profitability in 2H 2023: SoPa stated that 2023 revenue run rate can be $60 – 100 million and it expects to reach cash profitability sometime in 2H 2023.
• Focused on Loyalty Platform: SoPa’s ecosystem of technology-enabled companies synergistically work together to transform how consumers and merchants interact with one another. Its key focus is on generating customer loyalty, ease of transaction for consumers, and revenues for merchants. As more merchants and consumers in SEA register on its Society Pass platform, more transaction data is generated, and thus presenting more opportunities for creating loyalty from consumers to merchants.
• Lifestyle Platform: The Company has developed an online lifestyle, “Leflair” branded platform in Vietnam to enable consumers to purchase high-end brands in many categories. Using the company’s smart search engine, consumers search or review their favorite brands among hundreds of choices in various categories, including Apparel, Bags & Shoes, Accessories, Health & Beauty, Home & Lifestyle, International, Women, Men and Kids & Babies categories.
• Market Opportunities: Ascendiant believes that continued strong economic expansion, robust population growth, rising level of urbanization, the emergence of the middle class, and the increasing rate of adoption of mobile technology provide fast growing market opportunities for SoPa in SEA.
• Positive High Risks versus High Rewards: Overall, concerns outweighed by growth prospects and valuation. Society Pass’s main products still has long commercialization challenges ahead, but we believe the ~billion dollars market potential presents high rewards for the risks.
• Current valuation attractive: We are maintaining our BUY rating, but raising our 12-month price target to $3.75 from $3.50, based on a NPV analysis, representing significant upside from the current share price. We believe this valuation appropriately balances out the company’s high risks with its high growth prospects and large upside opportunities.
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