Maxim: Society Pass (Nasdaq: SOPA) – Raise Estimates on Expected Contributions from M&A, Positive on the South East Asia E-commerce Market

Rhea-AI Summary

Society Pass Inc. (SOPA) reported significant growth in its 2Q22 revenue, reaching $445K, a sharp increase from $8K year-over-year, though below expectations of $670K. The company ended June 2022 with $28M in cash and no debt, sufficient to fund growth for two years. Maxim Group raised revenue projections, expecting $12.9M for 2022 and $54M for 2023. Despite projected adjusted EBITDA losses widening in 2022 to ($13.9M), a narrowing is anticipated in 2023 to ($2.2M). Maxim views SOPA as undervalued with compelling valuation metrics compared to peers.

Positive

• 2Q22 revenue surged to $445K from $8K YoY.
• Strong cash position with $28M and no debt.
• Projected revenue growth to $12.9M in 2022 and $54M in 2023.
• Maxim believes SOPA is undervalued, trading at 0.4x EV/revenue compared to peer average of 2.3x.

Negative

• 2Q22 revenue fell short of estimates by $225K.
• Adjusted EBITDA loss widened to ($4.4M) in 3Q22, worse than projected.

NEW YORK, NY, Aug. 23, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire – Maxim Group LLC (“Maxim”) issues Equity Research Report on Society Pass Inc. (Nasdaq: SOPA) (“SoPa”).

Click Here (on Society Pass website) to view the full Maxim Equity Research Report.

Summary Points:

• SOPA is in the early stages of building an online South East Asian company. Luxury store, Leflair, was the primary revenue contributor for 2Q22. Other businesses are food and beverage online support, online delivery companies Handycart and Pushkart (bought during 1Q22), and Mangan.ph (2Q22), as well as Gorilla Networks, a telecom MVNO (early June '22). SOPA is also starting a loyalty points offering. Maxim believes there should be significant cross-selling opportunities and organic growth in the future. Specifically, Maxim believes Thoughtful Media can market the Company's other brands and the food delivery and luxury brand businesses can be expanded geographically. Maxim has a positive view on the SEA market given faster-than-expected growth rates, increasing mobile and ecommerce penetration, younger populations, travel opening back up, and the opportunity to consolidate smaller companies.

• 2Q22 revenue of $445K increased significantly from $8K in the prior year quarter, but was below our estimate of $670K. Results were held back as most of its businesses were very early stage. Almost all the quarter's revenue came from the online ordering segment, which currently consists of the company's online luxury store, Leflair. The cost of online marketing limited the amount put to use. Hardware and Software segments are currently not being prioritized. 3Q22 adjusted EBITDA loss of ($4.4M) was wider than our estimate of ($3.3M) and a loss of ($0.1M) in the prior year quarter. The variance vs. our estimate is primarily due to 1-time costs related to capital raises, M&A, higher growth investments, and public company-related costs.

• Healthy cash. SOPA ended June 2022 with $28M in cash and no debt. Cash included the $25M, net from November 2021 IPO and $10.7M, net from a February 2022 capital raise. Maxim projects current cash levels to be sufficient to fund organic growth over the next two years.

• Maxim raises revenue projections and expects significant growth for the next two years. Maxim expects growth from spending on marketing, expansions, and launch of Loyalty Points in mid-2022 and factoring in contributions from all announced acquisitions.

• Maxim projects revenue to increase from $0.5M in 2021, to $12.9M in 2022 (unchanged), and $54M in 2023 ($38.2M prior). The increase is due to the significant expected contribution from acquisitions and organic growth. Maxim projects 2022 adjusted EBITDA loss to widen to ($13.9M) (($12.7M prior), from a loss of ($4.9M) in 2021. The higher loss is due to one time costs related to acquisitions and higher public company expenses. For 2023, Maxim projects the adjusted EBITDA loss narrows to ($2.2M) from ($4.7M) prior.

• Compelling valuation – Maxim believes SOPA is undervalued and trades at a discount to its peer group. SOPA trades at an EV/revenue multiple of 0.4x our 2023 revenues compared to a peer group EV/revenue multiple of 2.3x our 2023 revenues. Maxim’s positive outlook is supported by the attractive SE Asian markets and opportunities to consolidate smaller companies. Management has announced plans to spin off Leflair Group and to have it listed on the Nasdaq by the end of 2022.

About Society Pass Inc

As a digitally-focused loyalty and data marketing ecosystem in Vietnam, Indonesia, Philippines, Singapore and Thailand and with offices located in Angeles, Bangkok, Hanoi, Ho Chi Minh City, Jakarta, Manila, and Singapore, SoPa is an acquisition-focused e-commerce holding company operating 6 interconnected verticals (loyalty, lifestyle, F&B, telecoms, digital media, and travel), which seamlessly connects millions of registered consumers and hundreds of thousands of registered merchants/brands across multiple product and service categories throughout SEA.

SoPa’s business model focuses on analysing user data through its Society Pass loyalty platform and circulation of its universal loyalty points or Society Points. The Society Pass loyalty platform drives customer acquisition and increases customer retention for merchants. Since its inception, SoPa has amassed over 3.3 million registered consumers and over 205,000 registered merchants/brands onto its platform. It has invested 2+ years building proprietary IT architecture to effectively scale and support its consumers, merchants, and acquisitions.

SoPa 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 Leflair.com, Vietnam’s leading lifestyle e-commerce platform; Pushkart.ph, a popular grocery delivery company in Philippines; Handycart.vn, a leading Vietnam-based restaurant delivery service; Mangan, a leading local restaurant delivery service in Philippines; Gorilla Networks, a Singapore-based, web3-enabled mobile blockchain network operator; Thoughtful Media Group, a Bangkok-based, a social commerce-focused, premium digital video multi-platform network, and NusaTrip, a leading Jakarta-based online travel agency in Indonesia and across SEA.

For more information, please check out: http://thesocietypass.com/.

Media Contacts:
PRecious Communications
sopa@preciouscomms.com

FAQ

What is Society Pass Inc.'s revenue for 2Q22?

Society Pass Inc. reported $445K in revenue for 2Q22.

What are Maxim Group's revenue projections for Society Pass Inc.?

Maxim projects revenue of $12.9M for 2022 and $54M for 2023.

How much cash did Society Pass Inc. have as of June 2022?

Society Pass Inc. ended June 2022 with $28M in cash.

What is the EBITDA loss projection for Society Pass Inc. in 2022?

The adjusted EBITDA loss is projected to widen to ($13.9M) for 2022.

Is Society Pass Inc. considered undervalued?

Yes, Maxim believes SOPA is trading at a discount compared to its peer group.