Een engelstalig artikel over Sino Payments
Sino Payments has its sights set on the big prize
Founded by the entrepreneur Benny Lee, TAP specialises in the point of sale retail systems used by the large multiples and works as a sub-contractor for Wincor-Nixdorf.Founded by the entrepreneur Benny Lee, TAP specialises in the point of sale retail systems used by the large multiples and works as a sub-contractor for Wincor-Nixdorf.
The recent announcement by Sino Payments (PINK:SNPY) on its tie-up with China’s Bank of Communications gave a hint of the quality and the scale of the opportunities likely to emerge in the next 12 months.
The group, which specialises in transaction processing systems, has sealed a deal which introduces BoC’s 20 million cardholders to large Hong Kong luxury retailers.
At least 4 million of these card-carrying members of China’s newly minted middle classes live in Guangdong Province, which gives them easy access to the former colony.
Sino Pay will receive a percentage of the value of transactions generated, which creates the blue-print for future tie-ups.
It also marks the first major commercial development since Sino Pay revealed plans to merge with local retail systems specialist TAP Investments Group.
Founded by the entrepreneur Benny Lee, TAP specialises in the point of sale retail systems used by the large multiples and works as a sub-contractor for Wincor-Nixdorf.
Its local markets are Hong Kong, China, the Philippines, Malaysia and Thailand, and it has a very impressive roster of clients.
It includes the AS Watson, the giant retail division of billionaire Li Ka-shing’s Hutchison Whampoa, which is active in 37 separate territories and owns the Superdrug chain here in the UK.
TAP’s other blue-chip clients include SM Malls and Robinsons Retail Group, two of only five major retail chains in the Philippines, and SOGO Hong Kong.
Post-merger, the plan is to grow the TAP business by embedding it deeper with existing customers, and winning new contracts.
The growth is expected to begin with the existing long term TAP clients some for whom TAP has been providing service for 24 years.
“We have projects to extend existing services, the first being to consolidate their credit card processing function,” revealed chief executive Matthew Mecke.
“So instead of 30 different countries and 30 different banks we have a project we are working on with First Data that we sign one contract for one price globally and we implement it across the retailers’ international footprint.
“They are the kind of things we want to extend from the current local market, private company service provision into more of a regional or international service provision.
“And this is with the existing customers. Once we complete this, we hope to get enquiries from other companies which might want something similar.”
There is also the huge opportunity to add e-commerce into the mix, which will enhance the product offering.
And as the BoC deal illustrates, it also opens up a potentially lucrative new revenue scheme.
With the BoC agreement TAP is pioneering an electronic loyalty card that goes everywhere you take your mobile phone.
However the big opportunity is presented by virtual gift cards, where the $400 cap on taking money out of the People’s Republic provides a ready and substantial potential market.
The use of these virtual gift cards offers the Chinese a means of spending more than their allotted sum of cash outside the country, whether it be on smart clothes or visit to the gambling Mecca of Macao.
The early movers in this field are only just getting off the ground in the US, but already we are seeing a lot of venture capital and retail industry money going into this fledgling sector.
“In the States there are two companies doing these virtual gift cards and they have US$25-30 million of funding from the major retailers and VCs,” said Mecke.
“While they won’t overtake credit cards, gift cards have the potential to be a big business.
“If you add loyalty cards and VIP cards and you roll them together you got a nice little programme. There’s nobody in Asia doing this apart from us.”
Lee and the major TAP shareholders will own 50.1 per cent of the enlarged group and will take a seat on the board. Mecke, meanwhile, will remain at the helm of Sino Pay as chairman and CEO.
TAP’s last published results (covering 2010) reveal the group was turning over US$4 million for a net profit of US$700,000.
The current growth rate is a healthy 20-40 per cent, which suggests profits should reach at least $1 million in 2012. And this is without the addition of new contract wins such as BoC.
Similar businesses in the sector are valued at 13 to 35 times prospective earnings. So an enlarged Sino Pay (including TAP) could credibly be valued at more than three times the company’s current market capitalisation.
However the aspirations are far grander than this. The plan is to take the group to NASDAQ full listing.
This will require a huge lift in sales and profits and a commensurate surge in the share price to around $4 from a current price of 6.85 cents!
Perhaps a more realistic intermediate step might be an AMEX listing when the share price goes above US$2.50.
“The whole idea of the merger is that Benny (Lee), the TAP founder, wants to be full listed NASDAQ,” said Mecke.
“Benny knows this is the plan and he has a lot of projects to get us there. But we are six cents at the moment.
“We are going to let loose the pent up energy of this private company that has never borrowed a dime and has just gone about making money.
“We are going to try and take full advantage of the relationships (it has) and the customer base. We have a fairly busy four to five years with just what we have on the table now.”