- A little-noticed announcement from mobile payment company KinerjaPay Corp. (OTCQB:KPAY) could portend one of the biggest acquisition/merger events of 2018, with more news to come in the next 2-3 months.
- KPAY is an Indonesian mobile payment provider with recent quarterly revenue growth of over 700% year-over-year, indicating that their platform is seeing traction in a huge addressable market.
- New deal could value KPAY at multiples of current stock price depending on terms and completely transform outlook - the company believes sales of $70 million in 2019 are possible.
NEW YORK, NY / ACCESSWIRE / June 13, 2018 / According to a recent press release, KinerjaPay Corp. (KPAY) may be on track to execute one of the most important acquisitions of 2018, which has gone mostly unnoticed by the stock markets.
KinerjaPay is a growing Indonesian mobile payment provider, enabling consumers to "Pay, Play and Buy" through its mobile app and web portal. Indonesia has one of the largest populations in the world, yet a huge portion of the population is still "unbanked" - they're not using typical banking solutions for payments, and mobile applications like KPAY are a rapidly growing solution. KPAY had $1.8 million in first quarter revenue, up over 700% from the same period a year ago.
KPAY has signed a Memorandum of Understanding (MoU) agreement with PT. Mitra Distribusi Utama (MDU), a mobile prepaid top-up provider in Indonesia, to acquire MDU's business. Amazingly, MDU had over $30 million sales in 2017, according to KPAY's press release, mainly in selling prepaid top-up balances and data plans to Indonesia's growing mobile internet user base. If you're in mobile payments, you've got to be doing mobile top-up transaction.
With a merged income statement and continued growth, KPAY believes it could do $70 million in 2019 sales, which could justify huge upside of 5X or more.
Indonesia's Mobile-Ready Population Is One Of The Largest Finance Opportunities In Ages
Like China, Indonesia is a mostly bank-free nation, and digital payment services are primed to be a go-to remedy for banking/payment alternative for the increasingly internet- and mobile-connected population.
Indonesia is one of the top 5 most populous regions in the world, yet only 40% of Indonesia's "bankable" consumers actually used a bank or traditional card-based payment services as of 2013, according to Deloitte. They project this number to reach 113 million people by 2020.
According to the intelligence service FT Confidential, a survey of 1,000 urbanites in 25 Indonesian cities revealed that about one-third used mobile payments at least once in the previous three months.
KinerjaPay is much like PayPal, or other digital payment solutions including VenMo, that allow people to send and receive money, pay bills, and make purchases without the use of a credit or debit card. KinerjaPay allows users to shop online, as well as pay for and play games within its ecosystem. They had over 200,000 transactions during the first quarter, less than two years into this business effort.
Combined Company Could Become THE Premier Player In Region
KinerjaPay's own growth has been great, and bringing MDU in-house would take it to the next level.
KinerjaPay reported $1.84M in first quarter 2018 revenue, 728% revenue growth compared to the first quarter of the previous year. That was based on 202,786 transactions in the period, versus only 29,321 in the same period in 2017, 692% growth.
MDU has been operating as a mobile prepaid top-up data package provider for all of the cellular operators in Indonesia since 2007. The company achieved over $30 million in sales in 2017, mainly in selling prepaid top-up and data plan cards in the region. The company averages 2,000,000 transactions quarterly. This is a huge opportunity in an ever-growing mobile user-base.
Combined, KPAY believes they can grow even further, and they've gone so far as to estimate sales in 2017 of $70 million in their latest press release.
This merger, if successful, could transform KPAY into one of the leading mobile prepaid and data plan distribution companies in the region. This acquisition will also help improve KPAY's operating income as it will be able to negotiate lower costs with telco service providers. By signing the MoU, both parties agree to start a 2-month Due Diligence process, to end in August, and will share available resources and data pertinent to their performance.
What's It Worth?
KPAY is risky, as a micro-cap stock with limited financial backing. The company has struggled in the past to bring down their marketing costs. The MDU transaction may never be complete, and anyone holding this stock should consider it a high-risk high-reward case.
While this announcement is not guaranteed to result in an acquisition or merger, it's a major first-step and could completely change KPAY in the coming year. And, few investors have noticed.
This is especially interesting in light of the lack of publicly traded mobile payment investment opportunities. Glance Technologies Inc (GLNNF) is one, and Alibaba's (NYSE: BABA) financial services affiliate Ant Financial another, which operates the Alipay mobile payment service. This company closed a $14 BILLION Series C funding round recently, a staggering affirmation of the potential for mobile payment services. KPAY's strategic acquisition may even be enough to get Ant Financial's attention, with an easy tuck-in entrance to this large market.
With the MDU closure, KPAY could be on track for more than $35 million in 12-month revenue (and they hope to double this in the next two years), which could easily substantiate a market valuation of 2-5X these sales... about $70 to $175 million. That would be 4X today's stock price, at the low end. That kind of potential upside, and traders should be keeping a close eye on KPAY this summer.
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