updated 11 Aug 2016 after 2Q results
Q2/2016: Debt-Free YuuZoo Continues to Show Strong Revenue
and Profit Growth, while Liabilities and Receivables Decrease
Revenue Grows 237% year-on-year to SGD36M
EBIT Surges 1040% to SGD14.3M
e-Commerce Jumps 313% to SGD18.9M
Receivables decrease to 19.5M from 34.7M at December 31st 2015
Summary of financial results for 2Q 2016 and half year ended 30 June 2016
2Q2016 2Q2015 1H2016 1H2015
(SGD Million) (SGD Million) Variance (SGD Million) (SGD Million) Variance
Total Income 36.0 10.7 237% 81.5 23.8 242%
e-Commerce 18.7 4.6 307% 47.2 7.9 497%
EBITA 15.5 3.8 311% 29.8 10.8 177%
EBIT 14.3 1.3 1040% 27.1 5.7 378%
Singapore, 10 August 2016 – Singapore-listed YuuZoo Corporation Limited (“YuuZoo”
SGX: AFC), one of the world’s first third-generation social e-Commerce company today
announced its second quarter 2016 results, highlighting the company’s continuous strong
performance and growth.
The Group’s total income grew by 237% from SGD10.7 million in 2Q 2015 to SGD 36
million in 2Q 2016. For the half year ended 30 June 2016, total income grew 242% yearon-year
to SGD 81.5 million. YuuZoo’s e-Commerce business jumped by 497% to SGD
47.2 million for the first half of 2016. EBIT surged by 1040% to SGD14.3 million in 2Q2016
and 378% to SGD 27.1 million in 1H 2016.
Trade and other receivables decreased by 44% to SGD19.5 million from SGD34.7 million
at December 31st 2015, while liabilities during the same period decreased by 67% to
SGD3.7 million from SGD11.2 million. The Company continued to operate fully debt-free.
In April 2016, YuuZoo announced its new franchise agreement in Mexico with Media Rock
S.A. de C.V. (“Media Rock”), a leading Mexican digital entertainment agency. Through
Media Rock’s clientele, which last year recorded revenues of over USD 200 million, the
agreement gives YuuZoo access to one of the world’s largest and fastest growing online
markets. Mexico has a population of 120 million people, of which an estimated 34.4 million
In June 2016, YuuZoo announced it had signed a distribution agreement with SportsHero,
a gamified social sports prediction platform where users can predict, interact and compete
on all major sports – virtually, and in real-time – to become a SportsHero. The application
has started to be marketed to YuuZoo’s network of over 118 million consumers across
164 countries. YuuZoo’s users leverage SportsHero’s highly engaging, gamified social
sports prediction platform, which includes daily, weekly, and monthly prizes. At launch,
daily average user engagement on SportsHero exceeds 10 minutes. YuuZoo charges
SportsHero $0.05 for each SportsHero installed by a YuuZoo user, with revenues from
the app shared 50-50 between YuuZoo and SportsHero.
Effective August 1st 2016, YuuZoo announced the appointment of Singaporean Fred Lim
as its new CFO. Fred Lim comes with a strong CFO background, having served as CFO
of SGX-listed Sunningdale Tech Ltd as well as CFO and Executive Director of China
Fanwo Public Security Limited.
Outlook for 2H 2016
Thomas Zilliacus, Executive Chairman of YuuZoo says: ““YuuZoo is, through its unique
partnership and franchise model, strongly positioned in the global social e-Commerce
space. The strategy of the Company, to build partnerships in the largest markets in the
world and to sell franchise licenses in the other countries has shown strong results in 1H
2016, with the growth expected to continue in 2H 2016. At earlier announced estimated
FY 2016 earnings, the company is trading at PE of 2.1 which is less than 1/10 (less than
10%) of the average PE of 27.2 for e-Commerce peers,”
2 he concludes.
1H FY2016 earnings S$27m..
EPS - 4.1 cents
NAV - 18.7 cents...
updated 31 march 2016
Alibaba and YuuZoo Sign Agreement for YuuZoo to Manage and Run Alibaba Sport Group’s E-Sport Events in China
Singapore & Shanghai, 30 March 2016: Singapore-listed YuuZoo Corporation Limited (“YuuZoo” SGX: AFC.SI), a leading global third generation social e- and m-commerce company, in a press conference organised today in Shanghai with the Alibaba Group, announced that it has signed an agreement with Alibaba Sports Group (“AliSports”). Under this agreement, YuuZoo, through its Chinese JV YuuGames, will organise and run the AliSports World Electronic Sport Games (“WESG”), as well as manage the E-Sports Clubs Competition Center for Alibaba throughout China. WESG will commence in April 2016 with the 20 appointed e-sports clubs competition centers. Contest participants will compete for the RMB 35.6 million (US$5.5 million) prize money.
AliSports is the newly-formed sports division of global e-commerce powerhouse Alibaba. It targets China’s highly lucrative sports industry, which is expected to grow to US$813.87 billion by 2025. AliSports will be engaged in different sectors of the sports industry, including eSports. The group plans to invest RMB 100 million (US$ 15.4 million) for WESG alone.
Under the agreement, AliSports will pay YuuGames a multimillion US dollar fee to organise and run WESG and manage AliSports’ E-Sports Clubs Competition Center. Through this deal, YuuZoo will gain a significant mumber of new users, who will be added to YuuZoo’s fast-growing userbase. Further, YuuZoo will generate additional revenue from promotional fees, advertising revenue, and e-commerce sales.
AliSports and YuuGames are planning to launch 1,200 eSports events this year in 15 cities across China, which is home to over 100 million eSports fans, and over 440 million gamers.
Thomas Zilliacus, chairman of both YuuZoo and YuuGames says, “We are very proud to have been selected by Alibaba Group and AliSports to be their partner and to organise their eSports events throughout China. This comes hot on the heels of YuuGames organizing some of China’s largest eSport events, the highly successful ESCC and CIG games, in partnership with key Chinese Government entities. We are confident that we can make Alibaba’s World Electronic Sport Games a hugely successful and leading event in China’s massive gaming market. As a new partner to China’s largest e-commerce group, we are not only looking to reinforce our position as a leader in China’s eSports sector, but also to discuss opportunities with Alibaba Group to jointly grow YuuZoo’s other China-based businesses, including our gaming business, payment business and social e-commerce business.”
At the press conference Zhang Dazhong, CEO of AliSports said, “Sports is a multibillion dollar business in China, with massive growth potential. That is why Alibaba is investing heavily in this vertical. Linking sport and technology enhances the quality of life. That is what we want to do through AliSports. We are happy and proud to have YuuZoo as a partner. In YuuGames, we have found a partner who shares our ideals. With YuuGames’ much lauded successes in organizing the top eSport events in China, it was easy for us to choose them as our official partner in organising our events. We look forward to working with them as we kick off World Electronic Sport Games in April.”
Upated 20 May 2015 - report by edison
DCF scenarios – upside potential if B2C strategy a success
There are many unknown variables (MAU progression, transaction values over the networks, commission rates on e-commerce, revenue share percentages, SAC), and as a result we have had to make many more assumptions than typical in our forecasts. We present four DCF scenarios.
All our scenarios assume a 12.5% WACC, tax rate increasing to 25% by year five and that 20% of revenues are tied up in working capital. We assume a 10-year growth phase where margins plateau after year five, and where revenue growth decreases from year five to 2% in perpetuity.
Current share price: a reverse DCF implies that the current share price discounts a five-year CAGR in revenues of 25% with EBIT margins peaking at c 15%. This scenario would be consistent with the group’s historic focus (ie of a PSP or a B2B network pure developer). For instance, our DCF model returns a value in line with the current share price if MAUs increase by c 3m pa with revenues reaching $200m on EBIT margins of 11% after five years.
Mid-case: if management can grow MAUs by c 10 million pa to reach c 50 million after five years, this would suggest revenues of approximately $400m and peak EBIT margins of 19%. Under this scenario, our DCF returns a value of S$0.81.
Rapid evolution of MAUs: network effect businesses rarely follow a middle ground. If the network effect truly takes hold, exponential growth could continue for longer. If revenues were approximately 50% above our mid-case scenario by year five (ie $600m), either because of higher ARPUs or higher MAUs (eg 20 million net MAU additions each year to give MAUs of c 100m by year five), EBIT margins could reach c 21%, returning a DCF value of c S$1.25.
Slow evolution of networks: equally, if key relationships underperform, or if management fails to bring on significant new partners, revenues could evolve at a slower pace. If 2017 revenues are $250m by year five, with peak margins of 14%, our DCF returns a value of c S$0.35 per share.
Our scenario analysis assumes a 12.5% WACC – relatively high given the early stage and the emerging market focus of the B2C initiatives. As the business matures, we would expect the WACC to come down. Exhibit 6 summarises the above scenarios flexed for different costs of equity.
Update 1Q2015 results
YuuZoo’s revenue increased 58% to US$ 9.6 million yearon-year
for three months ended 31 March 2015.
Company registered a positive EBITDA of US$ 5.1 million
vs a negative EBITDA of 0.3 million for Q1/2014
Increase in revenue and EBITDA mainly attributed to the sale of exclusive
franchise licenses, for which payment is received in shares
Singapore, 15 May 2015: Singapore-listed YuuZoo Corporation Limited (“YuuZoo”)
(SGX: AFC) is pleased to commence the financial year with 58% growth in revenue
and a positive EBITDA of 5.1 million versus a negative EBITDA of 0.3 million in the
corresponding quarter of 2014.
YuuZoo’s unique business model incorporates a payment model developed by a Big
Four audit firm whereby the franchisee pay YuuZoo for the franchise license by issuing
to YuuZoo, shares in the company owning and operating the license. This enables
YuuZoo to achieve two key objectives; to over time get a significantly higher share of
the recurring revenues from the advertising, e-commerce, gaming and payments
revenue generated by the franchisee, and to correctly determine the value of the asset
over time as the business of the franchisee develops. The assets will periodically be
assessed to determine whether there has been any change in the value of the shares.
Any such increase or decrease will be reflected by adjustment to the book value of the
asset when the assessment is made. The next assessment is planned for at the end
Page 2 of 3
The Company earlier, in its full year 2014 results announcement, stated that it will
recognize as revenue the full value of the assets (in the form of shares) it has received
as payment for the licenses when franchisees commence operations. The Company
has however decide to take a more conservative approach, and will recognize only
50% of the already heavily discounted valuation done by Big Four audit firm, with the
balance 50% recognised when the franchisee has achieved its second-quarter targets.
YuuZoo commenced trading on the main board of the Singapore Stock Exchange in
During Q1/2015, YuuZoo also announced the acquisition of IAHGames, a leading
distributor of online and box games in South East Asia the acquisition, which is to be
paid for 100% by issuing YuuZoo shares to the vendors, is subject to SGX approval.
During eight years of operations, IAH has built a registered user base in SEA of over
35 million users. The company holds regional rights to distributing and or publishing
leading game titles such as Grand Theft Auto, Counterstrike Online and Granado
IAH’s publishing and marketing partners include in Vietnam the government-owned
VTC Online, subsidiary of TV monopoly Vietnam Multimedia Corporation (VTC), with
a reach to a large portion of Vietnam’s 90 million inhabitants, and in Thailand, with 66
million inhabitants, True Digital, a subsidiary of True Corporation, a communications
conglomerate controlling Thailand’s largest cable TV provider TrueVisions, Thailand’s
largest ISP True Internet, and its third largest mobile operator True Move.
The Company in Q1/2015 also significantly strengthened its management team by
hiring experienced experts in key areas, including the hiring of Rio Inaba, former CEO
of Indonesia for Rakuten, the world’s third largest e-commerce company and former
Global President & Director of New Market Development, to manage YuuZoo’s ecommerce
Page 3 of 3
Outlook for FY2015
YuuZoo is, through its unique partnership and franchise model, positioned strongly in
the social e-commerce space. The company at the end of April announced the launch
of a weekly 45-minute football show and 5-minute advertorial on TV in China at the
Great Sport Media network channel of Shanghai Media Group, a TV channel with a
reach in excess of 300 million TV viewers. It also announced a joint venture with
Africa’s largest TV network NTA. The Company in the second quarter is expecting to
start the local marketing of its virtual shopping mall with a growing number of partners
and franchisees it earlier has signed agreements with. It also expects to sign new
agreements with other partners and franchisees in several markets where it is in
Updated 28 April 2015
FOR IMMEDIATE RELEASE
YUUZOO’S PROFITS FROM SALE OF LICENSES
TO NEW FRANCHISEES IN 59 COUNTRIES
VALUED AT 33.4 MILLION SGD BY BIG 4 AUDIT FIRM
Franchisees pay YuuZoo in shares of company owning the license
Profit from shares received under new deals signed valued at 33.4M
SGD as at February 2015 by big 4 audit firm
Share-based payment enables significant value increase over time, and
allows YuuZoo’s shareholders to become owners of social e-commerce
businesses covering 59 countries with 1.3 billion people
Singapore, 28th April 2015: Singapore Exchange Listed YuuZoo Corporation Limited (“YuuZoo” SGX:
AFC) one of the world’s first 3rd generation social e-commerce network, today announced that the
profits from the sale of new licenses to franchisees through valuation by a big 4 audit firm have been
valued at SGD 33.4 million (USD 24.2 million) as at February 2015. The revenue and profits from the
sale of the franchise licenses will, subject to auditor approval, be included in YuuZoo’s accounts when
the franchisees commence operations. An independent re-valuation will thereafter be conducted at the
end of each year.
Under a payment model developed by another big 4 audit firm, the franchisee pay YuuZoo for the
franchise license by issuing to YuuZoo, shares in the company owning the license. This enables
YuuZoo to achieve two key objectives; to over time get a significantly higher share of the recurring
revenues from the advertising, e-commerce, gaming and payments revenue generated by the
franchisee, and to correctly determine the value of the asset over time as the business of the franchisee
develops. From a shareholder perspective, this means that a YuuZoo shareholder becomes an owner
not only of YuuZoo Corporation Limited, but of a growing number of local social e-commerce businesses
in a growing number of countries, all of which can be sold at the right time.
YuuZoo has signed new franchise agreements that cover 59 countries and a population of 1.3 billion
people. Agreements have been signed in Asia, Europe and Africa. These include the already
announced agreements in South Korea and Turkey, as well as new agreements signed in other large
and fast-growing markets such as Poland, Romania, South Africa, Kenya etc.
The new franchisees are committed to register a combined minimum of 5.7 million new users within 12
months from launch, and 40 million users within 36 months from launch. Assuming each franchisee
generates a conservative 10% of average global B2C e-commerce revenue per user, which according
to published market data stands at 1,459 USD1 and an equally conservative 10% of average global
digital ad spend per user of 55.60 USD2
, 5.7 million active users would on an annual basis generate
topline revenue of 1.2 billion SGD, while 40 million active users on an annual basis would generate
topline revenues of over 8.3 billion SGD.
Says YuuZoo Chairman & CEO Thomas Zilliacus: “Our policy of entering overseas markets by
appointing a local franchisee enables us to fully localize our virtual shopping mall for each market, and
to expand our global footprint at a rapid pace. Our earlier franchisee model, where we received a
onetime cash fee for the license and a fixed revenue share on all future income, gave us a significantly
smaller revenue share and a fee that over time did not reflect the correct value. We assigned a big 4
1 1 Average B2C Ecommerce Sales per Digital Buyer Worldwide, by Region and Country, 2011-2016
2 Digital Ad Spending per Internet User Worldwide, by Region, 2013-2018
Page 2 of 2
audit firm to work out a model that would increase our revenue share on the recurring income and reflect
the correct value of the franchise license over time.
Under this “big 4” model we have signed new license agreements covering 59 countries. The stakes in
the franchise companies we have received as payment have been valued at a current value of 33.4M
SGD as at February 2015 by another big 4 audit firm. We believe the value of these unique social ecommerce
businesses once the franchise operations have started can become significantly higher
especially in large markets. The value will therefore be reassessed by an independent valuer at the end
of each year, and subject to our auditors be entered in our balance sheet at the correct value as at our
financial year ended 31 December 2015” he added.