MoneyHero — Emphasis on driving margin

MoneyHero (NASDAQ: MNY)

Last close As at 19/12/2024

USD1.07

−0.01 (−0.93%)

Market capitalisation

USD44m

More on this equity

Research: TMT

MoneyHero — Emphasis on driving margin

MoneyHero’s Q324 results show revenues up 6% y-o-y (9M24 +18%) and a smaller adjusted EBITDA loss, as expected. The important element of the narrative, though, is the emphasis on driving revenues in higher-margin product areas and increasing operating efficiency within the business. Group CFO Hao Qian has resigned to return to China, with the group FD, Danny Leung, stepping up on an interim basis. The market opportunity remains substantial, and with customer data now on a unified platform, MoneyHero is well placed to deliver improved outcomes for both providers and end consumers. Our forecasts are updated to show more moderate top-line growth through FY26e, generating stronger margins.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

MoneyHero

Emphasis on driving margin

Q324 results

Media

20 December 2024

Price

$1.08

Market cap

$47.8m

Net cash ($m, excluding lease liabilities) at 30 September 2024

47.7

Shares in issue

44.3m

Free float

39.9%

Code

MNY

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(11.6)

(8.5)

(36.7)

Rel (local)

(10.8)

(10.9)

(48.5)

52-week high/low

$3.06

$0.88

Business description

MoneyHero is a leading personal finance and digital insurance comparison platform in South-East Asia. The group operates online through both its direct to consumer (DTC) platforms and its B2B channel, Creatory. MoneyHero offers users financial products including credit cards, personal loans, mortgages and insurance.

Next events

Year-end trading update

January 2025

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

MoneyHero is a research client of Edison Investment Research Limited

MoneyHero’s Q324 results show revenues up 6% y-o-y (9M24 +18%) and a smaller adjusted EBITDA loss, as expected. The important element of the narrative, though, is the emphasis on driving revenues in higher-margin product areas and increasing operating efficiency within the business. Group CFO Hao Qian has resigned to return to China, with the group FD, Danny Leung, stepping up on an interim basis. The market opportunity remains substantial, and with customer data now on a unified platform, MoneyHero is well placed to deliver improved outcomes for both providers and end consumers. Our forecasts are updated to show more moderate top-line growth through FY26e, generating stronger margins.

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/22

68.1

(30.2)

(52.17)

0.00

N/A

N/A

12/23

80.7

(156.5)

(13.49)

0.00

N/A

N/A

12/24e

91.4

(21.6)

(0.41)

0.00

N/A

N/A

12/25e

107.6

(0.3)

(0.01)

0.00

N/A

N/A

12/26e

128.8

1.1

0.02

0.00

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Optimising the mix and cost base

Credit cards remain the group’s largest source of revenue (Q324: 63%). This was a challenging market in the quarter but remains an important part of the mix, with consumers typically handling several cards and looking for the most advantageous deals. It also acts as a ‘gateway’ product to cross-selling opportunities. With its new mobile app, MoneyHero should be able to increase engagement and help providers drive card usage post issue, as well as facilitate cross-selling. Wealth and investment products and the insurance vertical deliver higher margins, and both showed strong progress in Q324, up 34% and 36%, respectively. MoneyHero’s internal cost optimisation programme has been ongoing through Q324, so is not yet showing in the numbers, but should support the drive to pre-tax break-even in FY25.

Balance sheet firepower

MoneyHero ended Q324 with net cash of $47.7m (small lease liabilities only). This financial strength is supporting the internal investment in building out the unified platform, which enables a centralised customer view, and investment in advertising to drive growth. Importantly, though, it also gives management an advantage in a market ripe for consolidation, and the ability to strike partnerships, such as that with bolttech, from a position of strength. Strategic acquisitions are actively being sought that enhance scale and/or consolidate market share in MoneyHero’s geographies.

Valuation: Well below level indicated by DCF

Although our short-term revenue numbers are pulled back, our mid-term (FY27–34) expectations for growth are broadly unchanged (assuming a revenue CAGR of 11%). We have edged up our adjusted EBITDA margin to 7.8% (vs 7.6% previously) over the same time frame. These adjustments result in an implied DCF-based valuation of $2.71 per share (previously $2.86/share), well ahead of the current share price.

Q3 results

The revenue breakdown by geography and activity by quarter for the year to date is shown in Exhibit 1 below. The challenged areas were clearly the Singaporean market and the credit card market. In Singapore, this reflected some major providers pulling back on performance (paid) marketing activities in the period. While credit card revenues were down 13% year-on-year, there was an improvement in the quarter, with 4% growth over Q224. We would expect this to improve further with the increasing adoption of the app, which allows end consumers to gain greater granularity of insight over their spending breakdown. Management is also proactively diversifying the product portfolio available in Singapore, which should help on the margin front, alongside developing partnerships. The emphasis is on driving higher-margin products, such as personal loans, insurance and wealth and investment offerings.

In the Hong Kong market, the insurance offering is being boosted by the incorporation of real-time pricing in the aggregator space, driving engagement. This is the first live offering via the partnership with bolttech, announced in October.

Exhibit 1: Q324 revenue breakdown

$m

Q124

Q224

Q324

y-o-y growth (%)

Revenue

22.2

20.7

20.9

6%

By geography:

Singapore

.8.9

9.0

7.9

(13%)

Hong Kong

7.7

7.3

8.1

18%

Taiwan

1.4

1.4

1.0

5%

Philippines

4.0

2.9

4.0

49%

Malaysia

0.1

0.0

0.0

(88)%

By product vertical:

Credit cards

15.4

12.7

13.2

(13%)

Personal loans and mortgages

3.3

2.6

2.9

34%

Insurance

1.8

2.2

2.1

36%

Other verticals

1.6

3.2

2.7

252%

By channel:

Online financial comparison platforms

18.1

17.8

17.4

8%

Creatory

4.1

2.9

3.5

(0%)

Unique monthly users

8.5m

7.7m

7.4m

Source: MoneyHero

Drivers into FY25

We have revisited our forecasts in light of the Q324 results and the most obvious adjustment we have made is to the revenue line, as the implied growth in our previous forecasts for Q424 was no longer feasible. We have, though, taken a slightly more positive stance with regard to the margin, with a reduced loss expected for the current year and greater progress anticipated in FY25e and FY26e. This reflects the group’s greater emphasis on higher-margin product verticals, such as personal loans, insurance and wealth offerings, as well as the positive impact of the app-driven customer engagement strategy.

The progress into FY25 and onwards is supported by the group’s move onto a single, integrated platform. With this, MoneyHero can build a data lake that can then be used more effectively for segmentation and targeting.

At the front end, it also gives Moneyhero the ability to create a much more attractive user interface and experience, using tailored content appropriate to the site visitor’s point in the sales funnel. Creating high levels of consumer trust and driving brand recognition should increase organic traffic and reduce the need to spend on paid traffic for customer acquisition. The roll-out of the revamped website has recently started in the Singapore market and management is already starting to see an improvement in conversion rates, even at this very early stage. The timetable is for a roll-out to the Hong Kong market before the year-end.

The bolttech partnership, with its innovation in the insurance vertical, should also be a positive factor, as should continuing progress at Creatory, Moneyhero’s B2B business that enables third-party online channel partners and content creators to monetise their user base. The results in future periods should also benefit more obviously from the cost base changes that have been, and continue to be, implemented as part of management’s efficiency strategy, and which are built into our modelling.

Exhibit 2: Changes to forecasts

FY24e

FY24e

FY25e

FY25e

FY26e

FY26e

$m

Old

New

Change

Old

New

Change

Old

New

Change

Revenues

104.4

91.4

-12%

125.1

107.6

-14%

150.3

128.8

-14%

Adjusted EBITDA

(20.2)

(19.3)

N/A

2.5

3.0

+20%

6.2

6.5

+5%

Adjusted EBITDA margin

-22.4%

-21.1%

N/A

2.0%

2.8%

+80bp

4.1%

5.0%

90bp

Normalised PBT

(22.5)

(21.6)

N/A

(0.8)

(0.3)

N/A

0.9

1.1

+22%

Normalised basic EPS ($)

(0.43)

(0.41)

N/A

(0.02)

(0.01)

N/A

0.02

0.02

u/c%

Net cash (including leases)

53.6

55.0

+3%

53.6

56.8

+6%

59.4

63.2

+6%

Source: Edison Investment Research

Valuation

Due to the early stage of maturity of the group, it is difficult to derive a meaningful estimate of valuation from comparison with any particular peer set. Rather, we continue to use a discounted cash flow approach.

Based on our revised estimates above, and using an unchanged assumption on mid-term growth of 11% but a slightly higher averaged adjusted EBITDA margin of 7.8%, from 7.6%, we now derive a valuation equivalent to $2.71/share (previously $2.86/share). This is based on a weighted average cost of capital of 12% and terminal growth of 2% (unchanged). Exhibit 3 shows the sensitivity of that outcome to differing assumptions on revenue and margin.

Exhibit 3: DCF sensitivity ($ per share)

Revenue growth FY27–34

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Adjusted EBITDA margin FY2734

4.0%

2.28

2.37

2.46

2.55

2.64

2.74

5.0%

2.30

2.38

2.47

2.57

2.66

2.75

6.0%

2.31

2.40

2.49

2.58

2.68

2.77

7.0%

2.33

2.42

2.51

2.60

2.70

2.79

8.0%

2.35

2.44

2.53

2.62

2.72

2.81

9.0%

2.37

2.46

2.55

2.64

2.74

2.83

10.0%

2.38

2.47

2.57

2.66

2.76

2.85

11.0%

2.40

2.49

2.58

2.68

2.77

2.87

12.0%

2.42

2.51

2.60

2.70

2.79

2.89

Source: Edison Investment Research

Exhibit 4: Financial summary

$m

2022

2023

2024e

2025e

2026e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

68.1

80.7

91.4

107.6

128.8

Cost of Sales

(33.9)

(43.9)

(56.6)

(61.3)

(70.8)

Gross Profit

34.3

36.7

34.7

46.3

58.0

EBITDA

 

 

(15.6)

(6.8)

(19.3)

3.0

6.5

Operating profit (before amort. and excepts.)

 

 

(21.5)

(14.0)

(24.2)

(2.7)

(0.8)

Exceptionals

(19.5)

(15.5)

0.0

0.0

0.0

Share-based payments

0.0

(0.5)

(0.5)

(0.5)

(0.5)

Reported operating profit

(41.0)

(30.0)

(24.7)

(3.2)

(1.3)

Net Interest

(7.6)

(18.2)

2.6

2.4

1.9

Change in FV of financial instruments

(1.1)

(57.3)

0.0

0.0

0.0

Exceptionals

0.0

(67.0)

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(30.2)

(156.5)

(21.6)

(0.3)

1.1

Profit Before Tax (reported)

 

 

(49.7)

(172.5)

(22.1)

(0.8)

0.6

Reported tax

0.3

(0.1)

3.8

0.1

(0.1)

Profit After Tax (norm)

(25.2)

(129.9)

(17.9)

(0.3)

0.9

Profit After Tax (reported)

(49.4)

(172.6)

(18.3)

(0.7)

0.5

Minority interests

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(25.2)

(129.9)

(17.9)

(0.3)

0.9

Net income (reported)

(49.4)

(172.6)

(18.3)

(0.7)

0.5

Average Number of Shares Outstanding (m)

0.5

9.6

43.9

43.9

43.9

EPS - normalised ($)

 

 

(52.17)

(13.49)

(0.41)

(0.01)

0.02

EPS - normalised fully diluted (c)

 

 

(5,217.47)

(1,348.69)

(40.86)

(0.58)

2.12

EPS - basic reported ($)

 

 

(102.40)

(17.90)

(0.42)

(0.02)

66.60

Dividend ($)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

18.4

13.2

17.8

Gross Margin (%)

50.3

45.5

38.0

43.0

45.0

EBITDA Margin (%)

-23.0

-8.5

-21.1

2.8

5.0

Normalised Operating Margin (%)

-31.5

-17.4

-26.5

-2.5

-0.6

BALANCE SHEET

Fixed Assets

 

 

15.6

8.1

6.1

3.1

(1.9)

Intangible Assets

14.4

7.3

5.6

2.3

(2.7)

Tangible Assets

1.1

0.8

0.5

0.7

0.7

Investments & other

0.1

0.0

0.0

0.0

0.0

Current Assets

 

 

48.6

106.9

89.4

93.0

102.7

Contract assets

11.1

16.0

14.6

19.4

21.9

Debtors

13.2

22.1

19.0

16.0

16.9

Cash & cash equivalents

24.1

68.6

55.6

57.4

63.8

Other

0.2

0.2

0.2

0.2

0.2

Current Liabilities

 

 

(39.0)

(35.7)

(35.1)

(36.3)

(40.5)

Creditors

(23.2)

(33.2)

(32.6)

(33.8)

(38.0)

Short term borrowings

0.0

0.0

0.0

0.0

0.0

Finance leases

(0.5)

(0.6)

(0.6)

(0.6)

(0.6)

Other

(15.3)

(1.9)

(1.9)

(1.9)

(1.9)

Long Term Liabilities

 

 

(9.4)

(0.3)

(0.3)

(0.3)

(0.3)

Long term borrowings

(8.7)

0.0

0.0

0.0

0.0

Other long term liabilities

(0.7)

(0.3)

(0.3)

(0.3)

(0.3)

Net Assets

 

 

15.8

79.1

60.2

59.5

60.1

Minority interests

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

15.8

79.1

60.2

59.5

60.1

CASH FLOW

Operating Cash Flow

(44.9)

(172.5)

(19.7)

(0.8)

0.6

Working capital

1.9

(3.7)

4.3

(0.6)

0.9

Exceptional & other

28.4

159.2

(0.1)

3.3

5.3

Tax

0.0

0.0

3.8

0.1

(0.1)

Net operating cash flow

 

 

(14.6)

(17.0)

(11.8)

2.0

6.7

Capex

(5.0)

(2.2)

(3.6)

(2.6)

(2.2)

Net interest

(7.8)

(18.2)

2.6

2.4

1.9

Equity financing

0.0

91.5

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

Other

42.6

(9.4)

(0.2)

(0.1)

(0.1)

Net Cash Flow

15.2

44.7

(13.0)

1.8

6.4

Opening net debt/(cash) (including leases)

 

 

3.6

(14.5)

(68.0)

(55.0)

(56.8)

FX

(0.3)

(0.1)

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash) (including leases)

 

 

(14.5)

(68.0)

(55.0)

(56.8)

(63.2)

Source: Company accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by MoneyHero and prepared and issued by Edison, in consideration of a fee payable by MoneyHero. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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General disclaimer and copyright

This report has been commissioned by MoneyHero and prepared and issued by Edison, in consideration of a fee payable by MoneyHero. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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20 Red Lion Street

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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