Summary
Driven by high smartphone use, the rapid growth of mobile commerce (m-Commerce) in Southeast Asia (SEA) has begun the next gold rush for tech investors.
I sat down with the CEO of Weyland Tech Inc. for insight into this paradigm shift in commerce.
Mergers and acquisitions are heating up, and small companies have the market and technology the unicorns of SEA need to stay on top.
Each year more and more people are turning to digital wallets to store everything from credit, debit, and loyalty cards to money balance information on their smartphones and wearable devices. These mobile wallets allow users to quickly and easily make purchases both in-store and online, withdraw cash from ATMs, and send and receive money – all giving them greater flexibility and convenience in payment decisions.
While e-Commerce growth has been steady, with official census data estimates showing approximately 15% growth from the previous year, m-Commerce is expected to explode by the end of this decade. Business Insider forecasts that m-Commerce will make up 45% of the total e-Commerce market by 2020, up from 11% in 2014. Supporting this theme, large funding rounds and high valuations are expected to translate to at least several IPOs in the US and also give rise to M&A activity of smaller companies that have the technology, market share or niche operating focus that large strategic competitors don’t.
Asia-Pacific (“APAC”) in particular has experienced widespread early adoption of new consumer technologies, and is expected to record the highest CAGR globally during the forecast period with mobile wallet use steadily growing. In fact, in-store mobile payments are expected to top $500 billion by 2020. This increasing market for retail in APAC has incentivized payment processing solutions providers to focus more on developing compelling regional offerings.
At present, payment options within APAC can vary greatly both between countries but also within them due to significant gaps between urban and rural development. As a result, companies operating in Asia face a complicated and demanding landscape. Although mobile technology has proliferated rapidly, new bank and credit accounts have not kept pace even while APAC consumers increasingly prefer to use digital mobile payment methods where they are available. This has created new opportunities for smaller players to enter the market, and one company in particular is going after the billion-dollar opportunity in an underserved market.
Enabling Underserved Customers Accelerates Growth
Weyland Tech (OTCQX:WEYL) is a global provider of mobile business applications. Its CreateApp platform provides mobile presence to businesses in emerging markets, with partnerships on 3 continents and growing. Presented in 14 languages and featuring over 35 modules, the platform enables small- and medium-sized businesses to create native mobile apps for both iOS and Android devices without any technical knowledge or background, helping them to increase sales, reach more customers, and promote their products and services in an easy, affordable, and efficient manner.
Over the last year, Weyland Tech has built upon its mobile commercial platform by adding transactional and logistical components culminating in the launch of the AtozPay e-Wallet, a mobile payments platform. AtozPay is distinguished from many other mobile wallets in the APAC region in that it does not issue its own digital currency, but instead focuses on integrating and supporting a broad range of payment methods, products, and services that provide value to its users.
Investors should note that Weyland Tech achieved its growth primarily through these two complementary mobile products, which were both developed and marketed for customers who have been traditionally overlooked, whether for financial, educational, or geographic reasons. This approach has helped the company take advantage of the dramatic rate of smartphone penetration in APAC while avoiding competition with regional e-Commerce giants that have been primarily focused on top earners in first tier markets.
By providing the tools for participating in the mobile economy to traditionally cash-based, high-volume/low-margin businesses along with a complementary, inclusive e-Wallet to consumers, the company hopes to both reduce barriers to entry in the digital economy and lay the groundwork for future growth.
Today, Weyland Tech is aggressively marketing its mobile products to acquire a greater share of the multi-billion dollar e-Commerce and e-Payments market in Indonesia, positioning AtozPay to become one of the preferred solutions for more than two hundred million consumers.
Sit down interview with CEO Brent Suen
Weyland Tech CEO Brent Suen has spent the past 5 years devoting his company’s time and resources to capitalizing on the region’s growth and unique characteristics. When we spoke recently, he emphasized the value of these large but fragmented segments, noting, “We’re focused on creating opportunities for individuals as well as small- and medium-sized businesses to get into the mobile economy. Our goal has always been to provide the tools so that people can take advantage of all of the benefits of mobile commerce, whether that is simply having an mobile online presence or an extension of it, such as access to payment services, marketing, or logistics.”
After spending an hour interviewing Mr. Suen, I realized that Weyland’s success is a mission close to his heart, having built the current business from the ground up, without institutional support, in a crowded and competitive field. Although the company bootstrapped its way, it has benefited from having a management team with deep experience in APAC in both the mobile telecom and software technology spaces. His tenacity appears to be paying off, as the company is in expansion mode while working toward a NASDAQ uplisting, which will enable the company to raise funding more readily, fueling faster growth both organically and through acquisition.
Recently, Weyland Tech hired two capital market veterans, Sim Farar and Andre Peschong. Mr. Farar brings to 30 years of experience in both public and private sectors working with both the Clinton and Obama administration as a representative to the United Nations and as a Commissioner to the U.S. Advisory Commission on Public Diplomacy. In the private sector, Mr. Farar has served as CEO, Chairman of the Board, Director and consultant to a number of companies, including JDF Investment Co.
Mr. Peschong brings to Weyland Tech more than 25 years of senior management and capital markets experience. He has structured, negotiated and closed more than $500 million in corporate financing, with M&A transactions totaling more than $100 million in enterprise value. He co-founded Bridgewater Capital of Newport Beach, California, in 1994, and earlier served as CEO of a fast-growing consumer products company.
In a recent press release, Mr. Peschong commented:
“I’m excited to join Weyland at this pivotal time in its development and after reporting more than 100% year-over-year growth in its last quarter. Brent and his world-class management team have done an amazing job driving this rapid growth by delivering key m-Commerce technology to the world’s fastest-growing markets. I look forward to supporting their efforts as Weyland pursues a number of new market opportunities that will drive its continued emergence as the ‘next big mobile business applications company.’”
Integrating and Bundling Services Adds Value for Customers and the Company
Importantly, the opportunity to bundle, cross-sell, and up-sell these and other services are only just taking off. With this in mind, Weyland recently announced the launch of a new food delivery service called ‘AtozGo’, powered by the AtozPay platform, along with the CreateApp pilot program already underway in Indonesia. AtozGo is differentiated from other food delivery courier services by prioritizing affordable meals and short distance deliveries, allowing local restaurants that might not otherwise provide deliveries to sell more meals. As of this writing, the company has stated that deliveries per day have grown to over 1,200 per day on average having just launched four weeks ago.
Weyland Tech Head of Product Strategy, Matt Brent, said, "AtozGo continues the Company's focus on underserved market segments by connecting customers to restaurants and shops that otherwise wouldn't be able to provide these services. Between the heat and humidity and congested traffic conditions, going out for lunch during the workday can often be a daunting prospect. We believe AtozGo helps solve this by providing a fast, affordable, and local solution."
AtozGo expands upon the agent network that the company has been developing over the past 18 months to include courier services. Customers can use the AtozGo app to browse local restaurants, order and pay for food, and track delivery from their mobile devices. I encourage investors to watch this TV ad for AtozGo to get an idea of both life in Southeast Asia (SEA) and how Weyland Tech is positioning and marketing its products. Investors should realize that AtozGo is going head-to-head with SEA unicorn Grab - this in my opinion makes for an excellent investment opportunity in Weyland Tech.
Mergers and acquisitions by SEA unicorns
Grab announced in March 2018 that it has acquired Uber’s (NYSE:UBER) Southeast Asian operations. This deal is the largest-ever of its kind in SEA. Grab will integrate Uber’s ridesharing and food delivery business in the region into Grab’s existing multi-modal transportation and fintech platform. With the combined business, Grab will drive towards becoming the #1 online-to-offline (O2O) mobile platform in SEA and a major player in food delivery. Today, Grab continues to aggressively raise capital for growth through acquisitions. Grab has raised over US$8 billion since inception and is valued at around US$14 billion.
Weyland Tech has partnerships with both Grab and Go-Jek (GO-JEK). Weyland announced on September 6, 2018, that there had been an increase in private funding, IPO, merger and acquisition activity leading to the emergence of large ‘unicorn’ companies competing for market share in SE Asia. In February 2019, the company received an expression of interest in the acquisition of its e-Wallet business from a regional leader in ride sharing and delivery. CEO Brent Suen commented, “Comparable valuation metrics make this a source of encouragement as we follow through on our mandate at Weyland to build, grow, and sell the businesses that we launch in emerging markets.”
Risks
It is important to note that the share price for Weyland Tech is currently around $0.40 per share and the average daily volume is around 80,000 shares per day which is not the most liquid of stocks.
Furthermore, the OTCQX market is not a true bid/ask market as is the NASDAQ stock market or NYSE, and bids and asks are indications only, not true depth and breadth of interest.
Additionally, there is no guarantee of an uplisting from the OTCQX to NASDAQ and the company can only assume that its application will be approved and accepted.
Summary
Today, I see WEYL as an acquisition target which is extremely undervalued. WEYL currently is trading at a market capitalization of 1 times revenues; in my opinion, this disconnect in the market valuation to intrinsic value will not last long. On August 14, WEYL reported another record growth quarter. Comparative analysis of PaaS, Fintech, m-Commerce and eWallet companies are currently trading at 6-8 times revenues and being acquired at multiples of 10-15 times revenues.
Disclosure: I am/we are long WEYL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Source: https://seekingalpha.com/article/4286827-weyland-tech-inc-potential-m-target-southeast-asia