SINGAPORE, Apr 5, 2023 – (ACN Newswire) – Maxim Group LLC (“Maxim”) issues research report on Society Pass Inc. (Nasdaq: SOPA) (“SoPa”), Southeast Asia’s (SEA) next generation, data-driven, loyalty, fintech and e-commerce ecosystem.
Summary Points:
– 4Q22 results highlight early stages of growth – SoPa’s 4Q22 revenue of $2.6M increased significantly from $0.4M in the prior year quarter. Thoughtful Media (TMG) accounted for over 50% of quarterly revenue at $1.4M, followed by Leflair at $0.7M and NusaTrip online ticketing and reservation at $0.5M. SoPa has restructured several of its businesses to improve revenue and profitability and is focusing on the relatively higher margin segments.
– Metrics – SoPa ended ’22 with over 3.3M registered customers and 205K merchants and brands. During 2022, there were over 48K lifestyle purchases, 88K F&B deliveries and 178K travel bookings.
– Diversification – 2022 represented a period of significant diversification with SoPa now operating 6 verticals in 5 countries (Singapore, Vietnam, Philippines, Indonesia, and Thailand). Maxim believes TMG can market SoPa’s other brands and the businesses can be expanded geographically. Maxim has a positive view on the SEA market due to increasing mobile and ecommerce penetration, younger populations, travel coming back, and the opportunity to consolidate smaller companies.
– Outlook – Maxim narrows its EBITDA loss estimate for 2023, primarily due to factoring in better expense control. Maxim expects loyalty points to launch in June ’23, and full year contributions from all announced acquisitions. Maxim has not modeled any contributions from any acquisitions that have not yet been announced or closed, however, it is likely that management will continue to opportunistically acquire companies in their verticals of focus.
– Healthy balance sheet – SoPa ended 2022 with unrestricted cash of $18.9M (representing >1/2 of SoPa’s market cap), down from $23M at the of end of September ’22, and no material amount of debt. In February ’23, SoPa authorised a $2M stock repurchase program. With expense reduction plans and newer businesses, along with the launch of the Loyalty program, Maxim expects the cash burn to decline and that current levels of cash are sufficient to fund organic growth over the next two years.
– Society Pass is in the early stages of building an SEA e-commerce company with six verticals:
1) Lifestyle. Leflair provides luxury goods online in Vietnam. Leflair generated ~$2M in revenue in ’22, up from $500K in ’21. Sales from online ordering was $0.7M in 4Q22, up 73% y/y. Maxim anticipates management will focus on expanding geographically and in other retail categories in 2023. Leflair changed its platform in February 2023 to improve customer experience and drive sales.
2) Digital Advertising. Thoughtful Media Group is a Thailand based social media company acquired in July ’22. Business has been expanded to Vietnam, Indonesia, and Thailand. Digital advertising should have relatively higher margins among SOPA’s other segments, in part due to lower labour costs. In October ’22, TMG signed a partnership with Onlive.site, a live-streaming and digital content channel platform based in Spain. Onlive’s technology allows livestreaming, live video shopping, interactive video and online TV channel platform tools. The company announced the acquisition of More Media, an Indonesia based digital design and branding agency. Revenue in this segment was $1.4M for 4Q22 and $2.6M for the full year. Maxim notes that this only includes one half of results as the deal closed in 3Q22.
3) Online Travel. NusaTrip is an Indonesia based online travel platform acquired in August ’22. Maxim views Online Travel as one of the areas of key focus for growth both organically and through M&A. In February ’23, a partnership was announced with LuxUrban (LUXH – Buy) to drive SE Asian traffic to LuxUrban’s US based hotels. NusaTrip signed an MoU with PT Kerata Cepat Indonesia-China to be the preferred online ticket sales partner for Kereta Cepat Jakarta-Bandung, the first fast train service between Jakarta and Bandung. Revenue was $0.5M for the quarter and $0.7M for the year.
4) Telecom. Acquired June ’22, Gorilla is a Singapore based blockchain telecom offering local and travel e-SIM services. Although a small revenue contributor, it provides blockchain and Web 3.0 technology that can be expanded to other areas, such as social media interactions on websites.
5) Online Food and beverage delivery. Handycart (Vietnam), Pushkart (Philippines), and Mangan (Philippines). F&B is small contributor today but is strategic in terms of users that can be monetized in other verticals. For ’23, Maxim anticipates management will focus on combining their offerings.
6) Loyalty. Loyalty plan was soft launched in June ’22 with a hard launch across all verticals targeted for June ’23. Stripe, a digital wallet, is a partner for payments. While adoption is not certain, Maxim expect Loyalty to be the higher margin of SOPA’s verticals.
– Compelling valuation – reiterate Buy. SOPA trades at an EV/revenue multiple of 0.4x our 2024 revenue estimate with over half of its market cap in cash vs. the peer average of 2.8x. Maxim’s price target is $2.75 supported by our 10-year DCF analysis, which utilizes a 22% discount rate (unchanged), 13x terminal multiple (prior 15x), and 3% terminal growth rate (unchanged). This equates to an EV/revenue multiple of 2.0x. A discount to the peer average is warranted, in our view due to SOPA’s smaller size and acquisition integration risk. Our positive outlook is supported by the attractive SE Asian markets and opportunities to consolidate smaller companies.
About Society Pass Inc.
Founded in 2018 as a data-driven loyalty, fintech and e-commerce ecosystem in the fast-growing markets of Vietnam, Indonesia, Philippines, Singapore and Thailand, which account for more than 80% of the SEA population, and with offices located in Angeles, Bangkok, Ho Chi Minh City, Jakarta, Manila, and Singapore, Society Pass Incorporated (Nasdaq: SOPA) is an acquisition-focused holding company operating 6 interconnected verticals (loyalty, digital media, travel, telecoms, lifestyle, and F&B), which seamlessly connects millions of registered consumers and hundreds of thousands of registered merchants/brands across multiple product and service categories throughout SEA.
Society Pass completed an initial public offering and began trading on the Nasdaq under the ticker SOPA in November 2021. SOPA shares were added to the Russell 2000 index in December 2021.
SoPa acquires fast growing e-commerce companies and expands its user base across a robust product and service ecosystem. SoPa integrates these complementary businesses through its signature Society Pass fintech platform and circulation of its universal loyalty points or Society Points, which has entered beta testing and is expected to launch broadly at the beginning of 2023. Society Pass loyalty program members earn and redeem Society Points and receive personalised promotions based on SoPa’s data capabilities and understanding of consumer shopping behaviour. SoPa has amassed more than 3.3 million registered consumers and over 205,000 registered merchants and brands. It has invested 2+ years building proprietary IT architecture to effectively scale and support its consumers, merchants, and acquisitions.
Society Pass leverages technology to tailor a more personalised experience for customers in the purchase journey and to transform the entire retail value chain in SEA. SoPa operates Thoughtful Media Group, a Thailand-based, a social commerce-focused, premium digital video multi-platform network; NusaTrip, a leading Indonesia-based Online Travel Agency; Gorilla Networks, a Singapore-based, web3-enabled mobile blockchain network operator; Leflair.com, Vietnam’s leading lifestyle e-commerce platform; Pushkart.ph, a popular grocery delivery company in Philippines; Handycart.vn, a leading online restaurant delivery service based in Vietnam; and Mangan.ph, a leading local restaurant delivery service in Philippines.
 Compelling Valuation; 4Q22 EBITDA Beats Forecast; Positive on Organic Growth & M&A){kind=link}