- First full year a success, KinerjaPay (KPAY) is growing transactions, users, and revenue in one of largest digital payments markets globally…1100% revenue growth Q2 to Q3
- Upcoming pivot to token/cryptocurrency operations could massively grow user base on top of inherent growth today, and company could bring in significant capital in the coming months. KPAY could be poised for explosive move, back to highs with 2017 results and possibly 500-600% based on comparison to other public companies
Little-known digital payments company KinerjaPay (KPAY) put up stellar 2017 numbers this week, its first full year as a public company, setting the company up for a potentially big 2018 as they continue to expand in one of the largest digital payments markets globally.
Indonesia, where KPAY operates, is the 4th most populous country in the world, but only 40% of consumers actually use a traditional bank. KinerjaPay's business is built on mobile and digital payments, but is not limited to sending and receiving money. KinerjaPay also has their own e-commerce, gaming, and bill pay platform, generating revenue for the company based on small transaction fees.
Transactions and revenue are growing, with 615K, versus 320K total transactions reported in 2016, or nearly 100% growth. The company posted quarterly transactional revenue of $1.76 million in Q3 of 2017, an 1,183% increase over $148.7K recorded in the second quarter. And, average revenue per user is growing, to $20.82 in 2017, a 177% increase from the $7.51 in 2016. The company added 21 partnerships, including Uber and three major finance/loan companies in the country.
With these metrics pointed in the right direction, the company's plan to introduce their current in-app currency KCOIN through an Initial Coin Offering by the 2nd quarter of this year could be the next major expansion move, bringing in non-dilutive capital and a captive new user base in these coin owners. Despite the slump in many cryptocurrencies recently, this segment is still booming, with $3.23 billion in ICO fundraising in Q4 of 2017 alone. Plus, KPAY could be the first publicly traded company to own a cryptocurrency exchange. A return to highs could represent 150% of upside, and KPAY could be worth 5-6X with proper execution, based on similar public company metrics.
KinerjaPay Penetrating Untapped and Growing Market for Digital Financial Services In South Asia
Shockingly, only 40% of Indonesian "bankable" consumers use a bank or traditional card-based payment services as of 2013, according to Deloitte, a number projected to reach 113 million people by 2020. Like China, this is a mostly bank-free nation, and digital payment services are primed to be a go-to remedy for banking/payment services for the increasingly internet- and mobile-connected population. 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 that allow people to send and receive money, pay bills, and make purchases without the use of a credit or debit card.
The opportunity for KPAY to take market share in Indonesia is tremendous, and with average revenue per user growing to $20 last year, the company doesn't need many customers for the income statement to become exceptionally attractive. 1 million users, for instance, could equate to $20m in annual revenue - the company is already on track for $6 to $8 million in revenue based on their last reported quarter.
What's it Worth? Public Companies Trading at 6 to 20X Sales
For comparison, the publicly listed Shopify (NYSE:SHOP) carries a market capitalization of $12 billion based on $580 million in revenue during the previous 12 months… a Price/Sales ratio of 20. This kind of Price-to-Sales ratio applied to KPAY could justify a market valuation of $120 million for the small company, based on $6 million in estimated annual revenue if sales continue to come in at $1.5-$2 million quarterly.
$120 million in market value is 10 times the current market capitalization at KPAY. At $1.00, KPAY is trading at barely more than 1X their current annualized run rate, meaning that even climbing to 6X sales, like other app-based software companies, suggests 500-600% of upside could be possible with execution.
Plans for Cryptocurrency Launch Could Catalyze Next Breakout Move
With operating metrics moving in the right direction, 2018 is all about continued penetration and new expansion ventures. KinerjaPay's platform includes not only digital financial services offerings, but also gaming and e-commerce outlets. Inside, users can utilize the KCOIN, the company's own internal currency for in-app transactions. As a result, the company is making a smart and unique move to explode this currency's growth. Announced late last year, KPAY plans to conduct an Initial Coin Offering with KCOIN, taking this in-app currency global through their own cryptocurrency exchange, called KryptoX. ICO participants will have KCOIN to use within the ecosystem, and the company will raise non-dilutive cash through the ICO…possibly as much as $5-10 million depending on demand.
Interestingly, demand for ICOs hasn't slumped despite assertions in the press. According to CoinDesk, investors spent more than $1.4 billion on tokens in December of 2017 alone, and a stunning $3.23 billion in Q4 of 2017. Total ICO spending, since their introduction in the last few years, stands at $5.68 billion!
Understanding this demand, KPAY could be on track to have assets of over $5 to 10 million by the end of 2018 with a successful ICO, or almost their entire market capitalization today. The company has also said they're in talks to finalize the acquisition of one of the largest e-payment portal and phone top-up companies in Indonesia, another near-term potential catalyst for the stock.
An investment in KPAY isn't without risks. The company's marketing expenditures are high, and they may have trouble bringing on new customers without incentives- costs and operating expenses could be hard to bring down. If the ICO is unsuccessful, KPAY could need to raise more money through equity sales, diluting current shareholders. As a microcap today, the stock could ultimately be worth nothing.
KPAY has retreated to support at $1.00, and a strong bounce before the next move higher could be about to get underway, much like Bitcoin Investment Trust (OTCQX:GBTC) in recent days. A move back to highs at $2.75 based on KPAY's 2017 results isn't out of the question, and the fundamentals could support a move of 500-600% rapidly if investors pick up on the potential in 2018. That could happen before Q2 as the ICO gets underway…it's expected to be complete in the next 4 months, meaning traders should be prepared for a possible move higher under the right execution.
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