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1. Bank Jago (Indonesia/Digital banking)

2021 ytd performance: +292% | market cap: US$13.5bn

Bank Jago, which is listed on the Indonesia Stock Exchange, was formerly known as Bank Artos. It was acquired by Metamorfosis Ekosistem in 2019 and was subsequently renamed to reflect an ambition to become a completely digital bank. Gojek took a 22% stake in 2020, and earlier this year the company launched its life-centric digital banking app, with the goal of simplifying clients’ financial management.

Bank Jago has three key objectives in the near term: 1) to strengthen its balance sheet and profitability; 2) to invest in technology; and 3) to forge collaborative partnerships.

To achieve these goals, the bank has conducted two rights issues to adequately recapitalise and has strengthened its senior management team by hiring top talent for various essential roles. In addition, the bank has built partnerships with key fintech operators, notably Gojek, and has plans to further expand its network.

The recent Gojek and Tokopedia merger, which will be a game changer for the ASEAN tech ecosystem, should also benefit the bank by improving its customer reach.

During Q1 21, operating income rose three-fold to US$3,289mn. However, Bank Jago remains loss-making; the Q1 21 loss of US$2,965mn (up 50% yoy) resulted from high operating expenses that doubled yoy, with the cost/ income ratio at 182%. The bank is very well capitalised, with equity of US$575mn (versus US$87mn in December 2020) and a capital adequacy ratio of 538%. Loans currently constitute just 15% of total assets, but this proportion is likely to increase as the business matures. Loans currently constitute just 15% of total assets, but this proportion is likely to increase as the business matures.

Indonesia is the largest and fastest-growing internet economy in Southeast Asia

Source: Company presentation

2. 360 DigiTech (China/Digital lending)

2021 ytd performance: +266% | market cap: US$6.6bn

360 DigiTech (listed on Nasdaq) is a technology-driven platform connecting consumers and SMEs to financial institutions. The company’s core product is a digital line of credit that borrowers typically utilise for personal consumption, education, leisure, healthcare, etc. The company operates as both loan originator and as a third-party facilitator for financial institutions; the latter has been the major focus in recent years.

The firm also provides SaaS solutions to institutions such as risk management and post-lending credit management. 95% of credit applications are fully automated and do not require human interaction, with loans typically disbursed within five minutes.

As at end-2020, 360 DigiTech had 169mn total registered users, 33mn users with approved credit lines and 21mn cumulative borrowers. The company partners with 105 financial institutions.

360 DigiTech technology platform

Source: Company presentation

During Q1 21, the company originated/facilitated loans worth US$11.4bn (up 40% yoy). Of these loans, c50% were capital-light, meaning 360 Digitech did not have any direct credit risk exposure. Total revenues for the quarter clocked in at US$549mn (up 13% yoy), operational income at US$238mn (up 746%) and net income at US$206mn (up 635%).

Our research partners, EqualOcean, remain bullish on the stock since the Chinese regulator’s crackdown on online lending companies has created space for 360 Digitech, in addition to the firm’s strong credit risk management and technology focus.

3. Futu Holdings (China/Investech)

2021 ytd performance: +237% | market cap: US$22.6bn

Futu Holdings Limited, which was founded in 2007 and listed on Nasdaq in March 2019, is an investech company offering a fully digitalised brokerage and wealth management platform, Futubull. Primary fee-generating services include trade execution and margin financing, with clients able to trade a wide range of securities such as stocks, warrants and options.

Futu posted strong performance in Q1 21: its registered clients rose 140% yoy to 1.9mn and its paying clients rose 231% to 0.8mn. The firm’s trading volume reached US$284bn in the quarter, representing c367% yoy growth; activity levels have risen sharply during the pandemic. Total revenue rose 349% to US$284mn.

Futus

Futu is aiming to diversify its revenue mix. Currently, brokerage commissions and fee handling charges (predominantly on equities and equity-linked derivatives) remain the company’s main revenue source, though with a gradually decreasing percentage. Interest income is primarily derived from margin financing, bank deposits, IPO financing and securities borrowing and lending services.

Other income comes from a wide variety of sources such as service charges, underwriting fees, market information and data income. Concerning new business lines, margin financing and securities lending services are likely key future growth drivers.

4. Newegg Commerce (US/E-commerce)

2021 performance: +147% | market cap: US$3.8bn

Newegg Commerce is a Nasdaq-listed e-commerce company for computer equipment. It is headquartered in China and operates worldwide. Newegg has 25mn customers that procure a variety of tech-related hardware. It has mastered the logistics of tech delivery to the extent that it is superior to Amazon in some categories.

Newegg Commerce has now branched out into consumer electronics, gaming and entertainment equipment. Its sales have been bolstered by the pandemic.

5. Angel Broking (India/Investech)

2021 ytd performance: +133% | market cap: US$889mn

Angel Broking (listed on the National Stock Exchange of India) is a digital investment services company offering stock trading, advisory services, margin funding, mutual fund investments, etc., to its customers. It is one of the largest retail brokerage houses in India. The company was incorporated in 1996, but shifted to a fully digital business model in 2019.

Angel Broking has various innovative product offerings, which include ARQ (a robo-advisory platform), iTrade Prime (a trading platform offering flat per-order pricing for various asset classes) and AngelBee (a mutual fund investment platform). The company uses state-of-the-art technologies including machine learning and artificial intelligence to improve the consumer experience. It currently has a total client base of 4.1mn, with 1.6mn active clients. Its 8.3% market share makes it the fourth-largest broker in India.

Angel Broking product portfolio

Source: Company presentation

Angel Broking recently appointed Narayan Gangadhar as its new CEO, after its previous CEO, Vinay Agarwal, passed away. Gangadhar has two decades of experience with leading global technology companies including Google, Microsoft, Amazon and Uber. He has said that his key focus will be to make Angel Broking’s products more accessible to the mass market.

During the year ending March 2021, the company posted strong results, with average daily turnover reaching US$27bn, up 380% yoy (Q4 turnover was even higher at US$51bn). Revenue rose 72% to US$178mn and net profit grew 261% yoy to US$41mn.

The retail brokerage segment has strong growth potential as India remains an underpenetrated market, with a penetration rate of just 4.1% of the total population compared with 11% in China and 32% in the US. The growth momentum of Demat accounts (which are required to hold debt and equity securities) has improved, with 35% yoy growth across the industry in the year ended March 2021, versus 9% CAGR in the past five years. However, competition remains strong with Zerodha, 5Paisa and Upstox being key competitors, and other brokers also lifting their game.

6. Vietnam International Bank (Digital banking)

2021 ytd performance: +119% | market cap: US$3.4bn

Vietnam International Bank (VIB; Ho Chi Minh Stock Exchange) was incorporated in 1996 and is a leading retail bank in Vietnam with strong digital capabilities. The bank has been awarded Digital Bank of the Year and Best Retail Digital Banking Experience for the past four years by The Assets Triple A.

VIB has been continuously innovating in the areas of digital banking and card solutions. For example, in 2020, VIB successfully applied AI and Big Data technologies, along with modern processes such as e-KYC and e-Signature into the credit card approval and issuance process. This resulted in a record low approval time of 15-30 minutes, which is significantly faster than the industry standard. VIB has partnered with Grab to offer promotional services to VIB’s customers.

These innovative solutions have resulted in strong growth for VIB’s digital banking KPIs. In 2020, the number of its MyVIB digital app users increased 300% yoy, taking the total number of bank customers to 3mn. The number of active users grew 103% while the number of online transactions rose 110%. During Q1 2021, total operating income rose 53% yoy while profits grew at an even stronger rate of 68%, taking annualised ROE to 31.0%.

7. DP Eurasia NV (Russia/Food delivery)

2021 performance: +62% | market cap: US$147mn

London-listed DP Eurasia operates a restaurant franchise in Russia, Turkey, Azerbaijan and Georgia. It runs the Dominos Pizza brand in Turkey and Russia, offering pizza, chicken and beverages. DP Eurasia manages online pizza delivery and takeaway facilities.

Its share price rise in 2021 is due to the ongoing pandemic. Increased use of online food delivery has continued with further lockdowns. Sales rose 65% in Turkey and 19% in Russia in the first four months of 2021. Online sales as a proportion of delivery sales rose to 73% and 92% in Turkey and Russia in this period.

8. Sea (Singapore/E-commerce)

2020 performance: +42% | market cap: US$148.1bn

Sea’s exponential rise has made it the largest company in ASEAN, a region of 600mn people. It was founded by the Chinese-born Forrest Li, who moved to Singapore after graduating from Stanford. Sea, which is listed on NYSE, came to prominence for its gaming business (Garena), which produced Free Fire, the most downloaded mobile game of 2019. But its e-commerce platform has blossomed in the pandemic.

The companys cash bleed is likely to ease with the rise in e-commerce. Also, the company raised US$3bn in December 2020, which means it now has US$4bn in net cash, making it one of the best-funded of the Baby Amazons. Its valuation is likely to strengthen with the competition from Grab, alongside Gojek and Tokopedia (which have merged to form GoTo Group).

9. Ozon (Russia/E-commerce)

2021 performance: +41% | market cap: US$11.9bn

Ozon, listed on Nasdaq, is Russia’s e-commerce leader. It didnt list until November 2020, but its shares have risen 59% since its IPO.

The country has deep internet penetration with 95mn active users, but e-commerce penetration is only at 10% and is rising sharply in the pandemic era. Ozon is reaping the rewards of this trend and has huge potential. Our research provider Alfa has written about the company in-depth.

In the latest quarter, its GMV rose 135% yoy, while revenue rose 67% yoy. Total orders also skyrocketed by 161% to 13mn.

Ozons aspirations are not confined to e-commerce. It is investing heavily in financial services, and also has its sights on other Eastern European countries, including Belarus and Georgia.

10. WayFair Inc. (US/E-commerce)

2021 performance: +34% | market cap: US$31.6bn

Wayfair (listed on NYSE) projects itself as the Amazon of home furnishings. Users flocked to the website in the pandemic, including many from emerging markets, to which the company now has significant exposure.

Wayfair has expanded and changed rapidly in the Covid era and it now has a website offering a huge range of products, from office items to utensils. However, the company is spending at a faster clip than Amazon and it does not have a cloud business to support this cash burn.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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