Stellar first-half performance by Nasdaq-bound MOL Global
By Goh Thean Eu September 8, 2014
- 1H revenue up 33%, net profit more than doubles to RM11.2mil
- Most of its key segments register revenue growth
MALAYSIAN dotcom pioneer MOL Global Inc, which is expected to list on the Nasdaq Global Market the first week of October [clarified], registered a solid first-half performance.
The company, which provides an online payment system, saw first-half net profit more than double to RM11.2 million (US$3.5 million) versus RM5.1 million (US$1.6 million) in the first half of last year.
Gross profit increased by 17% to RM52.9 million (US$16.6 million), helped by growth in most segments – namely MOL Points, MOL Reloads and MOL Pay.
During the same period, it registered a 33% gain in revenue to RM105.1 million from RM78.7 million a year ago. More than half of the revenue, or close to RM60 million, came from its MOL Points business. [RM1 = US$0.31]
The MOL Points micropayment system, the company’s flagship product, involves the sale of payment credits that can be used by consumers to purchase online game credits and other digital content, including Facebook Game Cards.
According to MOL Global, MOL Points’ segment revenue increased by 29.9% while MOL Points’ volume increased by 27% to RM338.4 million.
MOL Points volume is the total retail value of content purchased through the redemption of vouchers for games and other digital content via MOL Points, while MOL Points revenue is the portion of money it gets as a result of revenue-sharing agreements.
The company attributed the segment’s performance to increased volume in Thailand, which primarily resulted from growth of LINE, a mobile chat service which accepts MOL Points as payment for its digital content.
“In Indonesia, volume increased by 54.3% to RM20.7 million, primarily resulting from our focus on expanding distribution in Indonesia and our acquisition of Ayopay during March 2013,” MOL Global said in its filing to the US Securities and Exchange Commission (SEC) recently.
The company’s MOL Reloads and MOL Pay segments also registered growth. During the six-month period, MOL Reloads increased 5.4% to RM17.6 million, mainly driven by an increase in volume as well as an increase in the number of active retailers to 40,000 from 36,383 at the end of June last year.
MOL Pay revenue more than tripled to RM15.2 million during the first half of 2014 (1H2014) from RM3.9 million last year.
The growth is mainly due to the recognition of the full six-month period of MOL Pay’s operations in Vietnam, following its acquisition of NganLuong in March 2013. (In 2013, it only recognised three months of revenue from its Vietnam operations in its books – this year, it was able to recognise the full six-month period).
Dragged by older games
However, MOL Global’s MMOG.asia segment suffered an 18.5% decline in revenue to RM9.5 million during the first half.
“This is mainly due to the declining popularity of certain older games which was not fully offset by newly-launched games. MMOG.asia’s active paying users decreased 33.2% to 72,962 as of June 30, 2014, from 109,181 as of June 30, 2013, mainly due to the replacement of older games with newer games that are still developing traction in the market,” the company said in its filing to the SEC.
Even though gross profit increased in all segments, the company highlighted that gross profit margin across all segments decreased to 50.4% during the first half, against 57.4% in the same period a year ago.
MOL Global said that the decline in gross profit margin was mainly driven by its MOL Points and MOL Pay segments.
The MOL Points segment’s gross profit margin decreased to 53.3% from 55.2% in the first half last year, while MOL Pay’s gross profit margin decreased from 44.9% in the first half 2013 to 14.1% in 1H2014.
“The decrease of MOL Pay’s segment gross profit margin is mainly due to the greater proportion of MOL Pay’s volume being derived from large online merchants,” MOL Global said.
The good news is that its MMOG.asia segment’s gross profit margin increased to 96%, versus 92.8% in the same period a year ago.
MOL Global, founded by Ganesh Kumar Bangah (pic) in 2000, is currently majority-owned by billionaire Vincent Tan. Ganesh is also a Digital News Asia Digerati50.
In its preliminary prospectus ahead of its initial public offering (IPO), it said it may raise up to US$300 million in the listing exercise.
The final amount of the IPO has yet to be determined as at press time. In the same preliminary prospectus, it revealed that it will take approximately US$30 million to repay debts – which comprise the RM29.3 million it owes to MOL Global Singapore in the form of interest-free advances when it acquired Game Sultan, PaytoGo, NganLuong, Rixty, Uniwiz and Zest.
It will also settle part of the RM68 million in revolving credit facility it received from Malaysia Debt Venture Bhd.
MOL Global also revealed that about US$25 million will be used to increase its beneficial ownership in its subsidiaries, while a substantial portion of its proceeds could be used to expand to new markets as well as to accelerate growth in its existing markets.
Currently, Tan has a 69.3% stake in MOL Global, while Sultan Ibrahim of Johor has 14.7% and Ganesh has 11.3%.
MOL Global IPO proceeds to be partly used to repay MDV loan
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