Argus Research Initiates Equity Research Report Coverage on Society Pass Inc. (NasdaqCM: SOPA)

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Apr 04, 2022, 09:05 ET

NEW YORK, April 4, 2022 /PRNewswire/ -- Argus Research, an independent investment research firm, has launched Equity Research Report coverage on Society Pass Inc. (NasdaqCM: SOPA)

Click here to view full Argus Equity Research Report

COMPANY HIGHLIGHTS: Excerpts (as conveyed by Argus Analyst Steve Silver) include:

SOPA: Building a Loyalty-Driven E-Commerce Platform in Southeast Asia

Society Pass is an e-commerce company operating in fast-growing Southeast Asian markets. The company has built a strong e-commerce platform for consumer goods, luxury fashion, and food and beverage delivery, and provides related software and systems for participating merchants. It is also expanding into additional businesses, including, travel booking and digital advertising.
Society Pass plans to integrate these diverse businesses through a loyalty program called Society Points, which it will launch in 2Q.
As of February 2022, Society Pass has amassed more than 1.6 million registered users and over 5,500 affiliated merchants. It expects to grow by acquiring smaller e-commerce companies that typically require additional funding, but are too small to attract venture capital.
The company's Leflair platform enables local businesses in Vietnam to sell premium domestic and foreign brands to enter Vietnam. Leflair features more than 3,500 registered brands, primarily in the fashion & accessories, beauty & personal care, and home & lifestyle categories, and has approximately 1.5 million registered users. Society Pass plans to expand Leflair to Philippines and Indonesia in the second half of 2022.
In February 2022, Society Pass acquired Handycart, a Vietnamese online grocery and restaurant delivery app with its own fleet of delivery vehicles. Handycart expects to provide delivery from 500 restaurants in Hanoi by the end of 2022.
In February 2022, Society Pass acquired Pushkart, a Philippines online grocery delivery app with its own fleet of delivery vehicles. Philippine consumers are able to use Pushkart across 19 cities in Metro Manila, with guaranteed next-day delivery service. Pushkart aims to more than double its registered user base to over 500,000 and drive app downloads to over 150,000 in 2022.
Society Pass raised $25.5 million in an initial public offering in November 2021 and $11.5 million in a follow-on offering in February 2022. In our view, the company has sufficient resources to maintain operations and fund projected acquisitions through 2022.
Based on our EV/revenue analysis, we arrive at a fair value estimate for SOPA of $10 per share, well above current levels.

INVESTMENT THESIS excerpts (Click Here to view full Argus Equity Research Report):

Society Pass is an e-commerce company operating in fast-growing Southeast Asian markets. It focuses on Vietnam, Indonesia, and Philippines, which together account for more than two-thirds of the population of Southeast Asia. The company has built a strong e-commerce platform for consumer goods, luxury fashion, and food and beverage delivery, and provides related software and systems for participating merchants. It is also expanding into additional businesses, including travel booking and digital advertising. Society Pass plans to integrate these diverse businesses by attracting and retaining customers through a loyalty program called Society Points, which it will launch in 2Q. Loyalty program members will be able to redeem points to make purchases directly from Society Pass or from affiliated merchants. They will also receive personalized promotions and discounts based on the company's data capabilities and understanding of consumer shopping behavior. We believe that this open-loop loyalty program differentiates Society Pass from other regional competitors.

The consumer portfolio includes fashion company Leflair, and online grocery delivery services Pushcart and Handycart. In 2Q22, we expect the company to add a Vietnam-based fashion e-commerce business and a Philippines-based online beauty product platform to its lifestyle vertical and enter the travel booking and digital advertising businesses, in addition to launching the loyalty program mentioned above. The company's goal is to provide consumers with a broad selection of goods, attractive discounts, and delivery services, while also giving merchants access to e-commerce systems and exposure to more potential customers. We expect Society Points to be rolled out first in Vietnam and then extended to other Southeast Asian markets.

As of February 2022, Society Pass has amassed more than 1.6 million registered users and over 5,500 registered merchants/brands on its platforms. It expects to grow by acquiring smaller e-commerce companies that typically require additional funding, but are too small to attract venture capital. Society Pass is able to acquire these companies at a relatively low cost, while retaining their management through equity awards and earnout incentives. It also adds the customers of acquired companies to its user base.

We have a favorable view of the company's target markets given their still limited e-commerce capabilities and strong projected growth. The "VIP countries" (Vietnam, Indonesia, Philippines) have young, rapidly growing populations with a median age of 25-30, compared to about 42 in China, a more mature market. Southeast Asian economies are also growing at a faster-than-average rate. According to the International Monetary Fund, since 2010, Southeast Asia has averaged 4.6% GDP growth, compared to 0.7% in Japan, 0.8% in the EU, and 1.7% in the U.S. In Vietnam, which we expect to be the company's main revenue driver in the near term, GDP rose at a 6.1% rate from 2011 to 2020 and is expected to grow at a 7% rate over the next five years. Indonesia and the Philippines are also among the world's fastest-growing economies.

Although Society Pass is in the early stages of revenue generation, we think that it has made significant progress in developing its e-commerce ecosystem. Its Lifestyle vertical is led by flagship brand Leflair, which generated revenues of $10 million as recently as 2019. Society Pass acquired Leflair out of bankruptcy in February 2021 and relaunched the site in September 2021. Leflair allows local consumers to access premium domestic and foreign brands at significantly discounted prices, and works to attract customers through daily flash sales, especially of odd lots and end-of-season merchandise. In 4Q21, it generated revenue of more than $0.5 million, and its strong growth has continued in 2022. The site features more than 3,500 registered brands, primarily in the fashion & accessories, beauty & personal care, and home & lifestyle categories, and has approximately 1.5 million registered users and more than 460,000 Facebook followers. Society Pass plans to expand Leflair to the Philippines and Indonesia in the second half of 2022.

Society Pass is working to increase the average transaction size in its Lifestyle vertical, which we think is likely as it expands its user base and continues to provide users with personalized offers. We also expect the Society Points loyalty program to help boost the average transaction basket and convert more registered users into regular customers.

In the Food & Beverage vertical, the company's app offers grocery and restaurant delivery, as well as delivery from "big-box" stores. It also allows users to search for products and write reviews. In February 2022, Society Pass acquired Pushkart.ph, an online grocery-shopping platform in the Philippines. Pushkart.ph has more than 125,000 registered users, and over 35,000 social media followers. Society Pass sees Pushkart.ph, which has been downloaded 20,000 times, as one of the Philippines' fastest-growing e-commerce platforms. Pushkart carries 60,000 products (SKUs) and filled 12,000 orders and generated $650,000 in gross market value (GMV) in 2021. It expects to have more than 500,000 users by the end of 2022.

In February 2022, Society Pass acquired Handycart, a Vietnamese online grocery and restaurant delivery app with its own fleet of delivery vehicles. Handycart expects to provide delivery from 500 restaurants in Hanoi by the end of 2022 and to expand into Ho Chi Minh City in the second half of 2022. Although Handycart's GMV was a modest $271,000 in 2021, the app has 3,000 registered customers and was downloaded 10,000 times last year. We expect registered customers to grow significantly over time.

The #HOTTAB service, a smaller revenue-generating vertical, helps merchants, particularly in the restaurant and hotel industries, to increase revenue and lower costs. It provides merchants with an online multilingual "store front," a fully integrated POS software solution, payment infrastructure, customer analytics, and other services. #HOTTAB functions both online and offline and facilitates the redemption of vouchers and rewards. The expansion of this business will require significant additional investment. As such, we see it as a less material near-term value driver for the company.

Society Pass Inc. (NasdaqCM: SOPA) thesocietypass.com

Society Pass Inc., founded in 2018 and based in Singapore, operates e-commerce platforms in Southeast Asia. The company focuses on the fast-growing markets of Vietnam, Indonesia, and Philippines, which together account for approximately two-thirds of the Southeast Asian population. The company's vertical markets include Lifestyle, Food and Beverage, Travel, Digital Media, Merchant Software, and Loyalty Programs. Society Pass completed an initial public offering and began trading on the Nasdaq under the ticker SOPA in November 2021. SOPA shares were added to the Russell 2000 index in December 2021

For more information please contact:

Ray Liang
Chief Financial Officer
[email protected]

About Argus Research Corp.

Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934) ̶ providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and pre-IPO research. In addition, Argus has recently committed to providing a sponsored research solution for small & mid-cap companies seeking coverage. Argus's Equity Research & earnings estimates are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.

For more Information please contact:

Darrell Stone
646-747-5438
[email protected]

Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.

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