Think Equity, LLC initiates coverage on Society Pass Inc
Summary Points:
• ECommerce Holding Company. Society Pass is an acquisition-focused eCommerce holding company operating six interconnected verticals in loyalty, lifestyle, food and beverage, telecoms, digital media, and travel, connecting millions of registered consumers and thousands of registered merchants in Southeast Asia. The company has on-boarded more than 3.3 million registered consumers and over 200K registered merchants and brands. The company generated $520K of sales in 2021, with a revenue forecast of $9.5 million for 2022 and $42.7 million for 2023.
• Seasoned and Diverse Executive Team. The company is led by a team of seasoned Asia-based executives who have spent a total of over 150 years on the ground in Asia with operating, marketing, technology and financial experience there. Society Pass is the sixth company that Dennis Nguyen, Group Founder, Chairman and CEO, has taken public. Over half the executives and employees are female. The company’s board of directors brings diverse experiences from technology to finance, to legal, to investment banking/private equity. The company has built a sophisticated technology platform in four years and on-boarded over 3.3 million registered consumers and over 200k registered merchants/brands.
• Integrated Ecosystem. Society Pass acquires companies in targeted verticals, which include lifestyle, food and beverage delivery, travel, digital media, telecommunications, and loyalty. In the lifestyle vertical, the company acquired Leflair in February 2021 and relaunched in the Vietnamese marketplace in September 2021. In food and beverage delivery, the company acquired Pushkart and Handycart in February 2022 and Mangan in July 2022. In July 2022, the company acquired Thoughtful Media, a Thailand-based digital media company. In August 2022, the company acquired NusaTrip, an Indonesia-based leading Southeast Asia OTA. The business model is to acquire companies in targeted verticals and integrate them into the platform.
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• Society Points – A Virtuous Cycle of Revenue Generation and Loyalty Creation in SEA. The company opportunistically acquires attractively valued companies to synergistically generate additional revenue streams, optimize efficiencies for merchants, and more cost-effectively aggregate consumers and merchants through synchronized marketing campaigns. The company’s loyalty platform, Society Points, drives this revenue generation and loyalty creation processes. The company has launched a beta version of the Society Pass app in June 2022 and expects to fully launch the app in 1Q 2023.
• Strategies for Digital Commerce in Asia/Pacific. Southeast Asia’s digital commerce revenue is expected to reach a 10-year CAGR of 32% by 2025. Business unit leaders, like Society Pass, carefully select their markets. Based on industry estimates, the expected growth of consumer spending on digital commerce for the Southeast Asian region will exceed $88 billion by 2025. This comes from a low penetration of the total retail market. Southeast Asia presents attractive growth opportunities and challenges for SoPa.
• Growth Strategies. As the company continues to acquire e-commerce platforms and apps in Southeast Asia, it should dramatically increase its revenue base, registered customer base, and registered merchant base. The company beta-launched its Society Pass loyalty platform in the second quarter 2022. The company is constantly upgrading its HR talent, especially identifying and mentoring female executives. It has built a powerful and integrated technology ecosystem targeting Southeast Asia, and operates in three of the world’s most attractive and fast-growing economies. Its senior executives have spent most of their lives in Southeast Asia running companies.
• Valuation. Think Equity’s 12-month price target is $6, based on 3.9x FY23 sales per share estimate.
• Solid Financials. As of June 30, 2022, the company had cash and cash equivalents of $28 million. For the six months ended June 30, 2022, the company’s stockholders’ equity was $35 million.
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