Logiq (OTC: LGIQ) (NEO: LGIQ)
Current Price: $2.75 (July 30, 2021)
Upside Potential Target: $20.00-30.00 – 12 months
Investment Concept:
Logiq (OTC: LGIQ) (NEO: LGIQ) is a global e-commerce and fintech enabler which is deeply undervalued in relation to it’s peer group, and offers +7X upside appreciation potential as this vaaluation gap closes.
LGIQ generated $37.9 million revenues in 2020, and currently trading at a market cap of just $75 million. This is a multiple of less than 2X revenues. By comparison most of LGIQ’s peer group trades at multiples of 10-20X revenues. Even if LGIQ were to trade at the low-end of this valuation range – 10X revenues, this would place LGIQ at $20.00+ today.
Additional upside potential as LGIQ accelerates revenue to $100 million+ run-rate via M&A, in next 12 months – which could send shares to $30+ (Based on 10X revenue multiple and projected 33 million shares out).
- Deeply undervalued: LGIQ shares should be trading at over $20.00 today – based on it’s peer group valuation multiples. LGIQ generated $37.9 million revenues in FY 2020. At the current share price of $2.75, LGIQ is valued at about $75 million which is less than 2X revenues. By comparison most of LGIQ peers are trading at 20X revenues – an almost 90% discount. The closing of this “valuation gap” presents a compelling upside opportunity. Recent listing on NEO exchange opens up to Canadian market and pathway to NYSE/NASDAQ up-listing should result in increased institutional market support/investor visibility and help close the valuation gap in coming months.
- Global E-Commerce is $4.89 Trillion market, and growing at 20% (emarketer 2020 report). LGIQ provides the “picks and shovels” for this digital gold rush.
- LGIQ is particularly focused on mobile commerce (m-commerce) and fast growing markets in Southeast Asia, including Indonesia where it offers fintech solutions including mobile payments, and food delivery services (similar to UberEats/GrubHub in the US).
- LGIQ is addressing a generational opportunity in Indonesia. Indonesia, with a population of 273 million and a rising middle class, is a mobile-first society and one of the fastest growing e-commerce markets worldwide with revenue of US$30 billion in 2020, placing it ahead of Russia and behind Australia.
- M&A presents additional upside catalysts: In recent interviews management has shared plans for additional strategic acquisitions. Brent Suen, LGIQ Chairman has stated an objective of ramping revenue to $100 million+ and building LGIQ into a “billion dollar enterprise”.
Multiple Catalysts for closing the valuation gap.
LGIQ has multiple paths for closing the valuation gap, and driving upside in the stock price:
- Organic Growth and Improving Margins: LGIQ has recently restructured its business to focus on higher margin SaaS digital marketing services with it’s recent Fixel and Rebel AI acquisitions. These high margin businesses are expected to show significant growth over the next 12 months which will get investor attention. In addition LGIQ’s fintech platform partnership in Indonesia is expected to start generating significant revenues starting in FY 2021. As LGIQ’s business starts firing on all cylinders, it has a good chance of exiting 2021 at a run rate of +$50 million revenues.
- M&A Growth Opportunities: LGIQ has a track record of generating revenue growth via strategic acquisitions, closing 3 transactions in the past 18 months. In a recent interview, LGIQ Chairman, Brent Suen has stated the company is regularly evaluating new opportunities and it’s current deal flow pipeline is about +$100 million revenues. Should LGIQ only close 50% of this group, that would add an additional $50 million revenues. With organic revenue growth, this could bring LGIQ’s total to $100 million+ revenues – which could command a $1 billion enterprise value (at 10X revenue multiple).
- Perception Change: Up until July 2021 LGIQ was only traded on the OTC market in the US, and as a result, suffered from lack of institutional sponsorship, and retail market support. With it’s recent listing on Canada’s NEO market (NEO: LGIQ), LGIQ is now able to attract insitutional buyers in Canada as well as large retail investor audiences. Because LGIQ has such a tight share structure, it does not take much to “move the needle” on the stock price.
Peer Group Valuation Comparables
|
Company |
Stock Price |
Revenues |
Price/Sales Multiple |
|
Shopify (NYSE: SHOP) |
$1514.00 |
$3,850 Million |
49.8 |
|
Sea Ltd (NYSE: SE) |
$279.30 |
$5,420 Million |
25.7 |
|
Jumia (NASDAQ: JMIA) |
$21.10 |
$137 Million |
11.5 |
|
StoneCo (NASDAQ STNE) |
$57.00 |
$3,330 Million |
5.0 |
|
Magnite (NASDAQ: MGNI) |
$29.00 |
$246 Million |
16 |
|
The Trade Desk (NYSE: TTD) |
$82.40 |
$895 Million |
44 |
|
Logiq (OTC: LGIQ) |
$3.16 |
$37 Million |
2 |
LGIQ Operations Highlights
Logiq operates through two business units, DataLogiq and App Logiq:
DataLogiq
DataLogiq, provides AI-driven, end-to-end eCommerce and AdTech digital marketing solutions for enterprises and major U.S. brands, including Home Advisor (NASDAQ: ANGI), QuinStreet (NASDAQ:QNST) and Sunrun (NASDAQ: RUN). About 70% of DataLogiq’s business is based in North America.
AppLogiq
AppLogiq is a platform-as-a-service, allowing small and medium enterprises to build tailored mobile e-commerce apps. Over 300,000 businesses currently use the platform. AppLogiq is offered in 14 languages across 10 countries and three continents, including some of the fastest-growing emerging markets in Southeast Asia, including Indonesia.
AppLogiq has a strong presence in Indonesia, where it is addressing a generational opportunity in Indonesia. Indonesia, with a population of 273 million and a rising middle class, is a mobile-first society and one of the fastest growing e-commerce markets worldwide with revenue of US$30 billion in 2020, placing it ahead of Russia and behind Australia.
Indonesia is a mobile-first economy, and AppLogiq helps thousands of small and medium businesses build and deploy mobile e-commerce apps which enable everything from product ordering to food ordering and delivery. To further meet the demands of Indonesia’s fast-growing consumer market, LGIQ also offers a fintech mobile payments service, and hyper-local food delivery service (similar to UberEats). Both of these services are powered by, and synergistic with the AppLogiq platform.
Fintech: PayLogiq
PayLogiq (AtozPay) is a mobile payments platform enabling consumers to pay bills, send payments, and other financial transactions, in addition to a micro lending service. In November 2020, LGIQ entered into a partnership to provide microlending services to 48 million members of the Koperasi Mona Santoso Berjaya (KMSB), Indonesia’s social security provider.
Deloitte estimates that over 113 million Indonesians are bankable but currently unbanked, a giant opportunity for mobile fintech solutions, like PayLogiq. Because these fintech services are recently launched, it is too early to make revenue projections. Clearly the fintech upside opportunity for LGIQ is staggering, and is a powerful catalyst to provide upside surprises in next 12 months.
Last-Mile Delivery: GoLogiq
GoLogiq (AtoZGo) is a hyper-local food delivery service, which focuses on the Jakarta metro (10 million population) market. Similar to UberEats, and similar tech-powered food delivery services globally, GoLogiq is especially valued by consumers in Jakarta because of the heavy traffic jams which makes it difficult to travel quickly in the nations capital city.
GoLogiq (AtoZGo) Highlights:
- 140,000+ Active Users
- 15,000+ Merchants
- Payment solutions for local food delivery service
- Integrated with major partners, including ShopeePay (the mobile e-wallet platform of Sea Limited (NYSE: SE)
LGIQ Global Footprint
In 2020 LGIQ drew 41% of its revenue from North America, 31% from Southeast Asia, and the rest from South Korea, the EU, and Africa, which gives the company exposure to some of the fastest growing e-commerce and fintech opportunities.
Bottom line:
LGIQ is compelling investment opportunity with multiple catalysts which can drive the stock from $2.75 today – to a potential upside of $20.00-30.00 in the next 12 months. As LGIQ executes, and progressively achieves new milestones and revenue growth over coming months – we expect the we expect the stock price to catch up quickly. As the stock is currently trading near it’s 52 week low, this is an assymetric bet offering a 10-to 1 payoff upside potential.