- Potential Uplisting to NASDAQ
- Plan to Accelerate Growth
- Stock Buyback Contemplated
- 10 days until closing of Series F Financing
KinerjaPay Corp (OTC: KPAY) exploded higher today on financing news that its digital payment and e-commerce platform was going to get a $200 million commitment from Indonesia’s PT Investa Wahana Development (Wahana Group). The strategic investor is planning to invest $100 million in the Company’s Series F offering and another $100 million in the Company’s Series G Convertible Preferred Stock. Wahana Group is known in Indonesia for its investments in commercial and residential buildings in Surbaya City and Bali. One of the services they offer are Bank Guarantees for projects. The company was also involved in the expansion of the Terminal 3 at Juanda Airport near Surabaya city. According to State-owned operator PT Angkasa Pura I (AP I) the new terminal will begin operations in May 2019.
NASDAQ Listing Jawboned
In order to get NASDAQ listing the company need to have a market cap over $45 mil, 450 shareholders, and a $4.00 stock price. Mr. Rio Chandranegara from Wahana Group commented that the KPAY is a US company “which trades in the world’s most liquid market in the United States, we are proud to be the financial backer of KPAY’s CEO Mr Edwin Ng and to support his growth plan in the near future.” Wahana Group’s, Chandranegara clearly foreshadows a NASDAQ listing because that is the “most liquid” market in the world. In addition the terms of the deal are a conversion prices to common once shares have traded for 20 days above $3.50/share. This price is very close to NASDAQ’s $4.00 listing requirement. The company has 35.7 mil shares issued and has a $9 million market capitalization at $.25 and a $14.3 million market capitalization at $.40. At $1.12 the company will have the minimum NASDAQ market capitalization but with the issuance of the Series F and the high conversion price of $1.80 its plain to see for OTC investors that this is the first price target before investors could see the slightest bit of dilution.
Closing of PT Mitra Distribusi Utama (PT. MDU) Imminent
The company has made it clear with their acquisition announcement on 10/4/18 that they were going to close the acquisition of PT MDU by year end which would add revenues of $39 million to the company. Platform as a service companies (PaaS) normally trade at 6 times sales in the public markets according to Bessemer Ventures. Using an industry multiple on the completion of this deal the stock should trade at a $234 million market cap. This is likely one of the reasons why Wahana Group chose to make such a large investment because the company has achieved critical mass and a potential NASDAQ listing would give them even more access to capital once they prove they can grow sales using Wahana’s investment capital. Indonesia is the 4th largest country in the world and with proper backing KPAY could be a major player in this sector in need of a technology solution for banking solutions.
Stock Buyback to Start after 10 Days
The company has openly announced a stock buyback on the closing of the Wahana Investment which is expected to close within the next 10 days. They said “the company also plans to allocate a certain portion of the subscription proceeds to repurchase KinerjaPay’s stock in the open market, subject to the rules and regulations of the SEC.” The timing of the this announcement and the S-1A which suggests that they got feedback from the SEC means that something is due in short order. The fact that they have an F and G series would indicate to most that they closed the Series C which was due to raise $7.5 million. If that get announced in short order which is very possible the stock is trading at a little over cash.
Acquisition Binge on Horizon
Mr Ng, CEO of KPAY said “this investment commitment, which is expected to close within the next ten days, will accelerate our growth plan for 2019 as we evaluate several potential acquisitions as well as proceed with strategic investments, which should, in turn, transform the Company into a significant market presence in our eCommerce and peer-to-peer lending operations, principally in Indonesia.” The plan is outlined on the S-1 in the competition section. They list their competitors Tokopedia, Bukalapak, Lazada, Zalora, OLX, Blibli and payment processors like Doku and Veritrans. There is a landgrab going on for the development of a smart phone based banking system. KPAY seems to be targeting closed systems whereby the consumer needs to have the payment platform to make purchases. An example of an open system is Weyland Tech’s (OTC: WEYL) AtoZPay which allows consumer’s access to multiple consumer offering with one central payment platform. It’s too early to see which type of open or closed platform will prevail. What is clear is that KPAY plans to “expand into prepaid mobile business, P2P lending, mobile payment solutions, online gaming and e-commerce services initially in Indonesia’s growing economy and expanding in SE Asia”
There are many potential catalysts. The first is the closing of the PT MDU acquisition which will bring in $39 million in revenues and assumes no growth. The next catalyst could be the closing of the Series C round as an investor with $200 million would easily be able to take down the Series C with ease. The press release said that closing would happen within 10 days and given the recent amendment of the S-1 they likely have an offering document that the SEC would reasonably approve registration. The investors seems to understand the growth in this business and commented on the expansion plans and acquisitions. The most telling indication that this deal is real is that the structure of the $200 million investment seems targeted directly at a NASDAQ listing. This stock is extremely undervalued and once investors realize that Wahana Group really does have the money the stock should reach new heights. $200 million is no joke and you can be assured that FIRNA asked for proper documentation before they let the press release out. With the next two weeks this stock could experience exponential rise. The PaaS sector is hot and Indonesia is the hottest area on the planet for this type of payment application. The short term price target is $1.80 based on the company receiving its $200 million investment. Assuming the money doesn’t come the closing of the PT MDU acquisition is still worth $243 million or $6.50/share. This is one of the most undiscovered jewels in OTC.
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