Why EasyEquities is an Undervalued Fintech Unicorn

Why EasyEquities is an Undervalued Fintech Unicorn
2:50
Published on: Jul 4, 2024 11:45:00 AM

Kela Securities highlights Purple Group, where we boast Assets Under Management (AUM) reaching approximately R51bn. Priced at 77c per share, EasyEquities is recognized as a fintech unicorn, undervalued yet competing directly with major financial institutions like Standard Bank, Alexander Forbes, and Sygnia. 



With a market capitalisation of R1bn, closer to a million retail investors (vs the next biggest Standard Bank with 70k), growing at c.20% a year while blended ARPU rises c.7% y-o-y to R31 a month and AUM reaches c.R51bn, Purple Group, alias EasyEquities (EE), is a fintech unicorn and looks too cheap at 77c.

As fintech platforms go, EE’s stewardship of SA’s future top consumers, financiers and borrowers, makes it a formidable player in the financial services space, especially where incumbents look to leverage digital’s analytics and efficiencies in distribution. The latter helps deepen coverage of sector verticals while the former is used to enable horizontal integration.



In our view, EE is performing exceptionally well with regards deepening advanced financial services and generating vast amounts of invaluable user data, both of which large banks can use to enhance their value proposition.

You simply can’t buy a platform and capabilities of that scale for the price.



EasyEquities, with its low-cost trading platform, sees its primary competition as Alexander Forbes, Standard Bank and Sygnia, and not Investec’s Clarity online platform, which only has a few thousand investors.

With the market expected to enter a period of extended rate declines, EasyEquities has potential to surprise the market on the upside and the company notes that its investors are already spending 30 percent more on investments and it is taking market share from the other banks.

EasyEquities has spent the last few years becoming a much more disciplined and productive business.

It is a similar business to the international operators Robin Hood and Trade Republic, but on a smaller scale. Robin Hood has grown from USD8-USD22 a share in a few years.

EasyEquities has aligned itself with Discovery, Capitec and Satrix.

Easy Equities continues to release products that "make sense”.
 
EasyEquities CEO Charles Savage concedes that it could have grown faster if it embraced financial advisors earlier in its business life, but says artificial intelligence will disintermediate many advisors in time.

EasyEquities’ cost to serve a customer is only R180 a year.

Further to this Thrive has ensured that the activity driven fees are augmented by Thrive fees that essentially charge clients who are inactive in the month, greatly improving client activity and ARPU.


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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an external contributor as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

 

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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