Indonesia’s Leading Smart Payment Company
We are initiating research coverage of Achiko with a Buy recommendation and a USD 1.70 price target. Our target price is based on a discounted cash flow entity model (primary valuation method).
Founded last year, Achiko is a holding company that acquires equity stakes in companies that provide consumers with secure and convenient e-payment solutions for purchasing digital goods. At the core of this business is the Indonesia-based Mimopay Group, a proprietary platform technology, which has provided payment services since 2012 and has been wholly owned by Achiko since last year. Logging 450,000 transactions per month and approximately 0.2 million unique users, Mimopay considers itself the leading e-payment aggregator in Indonesia. Using this payment services platform, Achiko concentrates on the segment of the Indonesian population that is active online but has neither a bank account nor a debit or credit card. The fintech company enables this substantial segment of the population—estimates indicate this category includes more than 51% of the approximately 262 million inhabitants of Indonesia—to settle payments through various offline and online channels in order to purchase digital goods. The company’s business activities currently focus on selling and re-selling in-game items in what are known as social media games.
Achiko however is about more than payment. The present plans include building a messenger service for the Southeast Asian market and providing support to video game publishers entering the Indonesian market. However, both business models are still in the development stage, and we do not expect substantial initial revenues until the coming financial year 2020e at the earliest.
After its successful debut in Indonesia, Achiko will next introduce smart payment services, followed by video game and messenger services in markets with a similar population structure and a similarly low percentage of bank account holders along with a high Internet penetration rate. The primary focus of the expansion strategy is entering the market in Myanmar, then Vietnam, the Philippines, and other Southeast Asian countries; in the medium term, the company also anticipates expanding into India, China and even the Western European countries.
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