Growth pains

MyBucks 9 January 2018 Update
Download PDF


Growth pains


Scale research report - Update

9 January 2018



Market cap


Share price graph

Share details




Deutsche Börse Scale

Shares in issue


Last equity as % of total assets per 31 December 2016


Business description

MyBucks is a Luxembourg fintech company, providing unsecured loans, banking solutions and insurance to consumers and SMEs in 11 African and two European countries and Australia. It uses AI technology to assess creditworthiness and is fully integrated with local banking systems.


Large target market with mobile and internet penetration well ahead of traditional banking.

Well-capitalised and with new and pending banking licences.

Proprietary AI and integration with local government and banking systems.


Sub-Saharan Africa is arguably at higher risk from financial and political shocks than more developed markets.

Competition from major incumbents, charities and other fintech companies.

Efforts required to bring Opportunity International (OI) banks to full profitability.


Adrian Phillips

+44 (0)20 3077 5700

MyBucks (MBC) is pursuing technological and regional growth initiatives despite immediate challenges in integrating new acquisitions. The group is fully committed to its strategy of supplying financial services to poorly serviced customers, primarily low and middle income clients in sub-Saharan Africa via the internet, cell phones and applications. The product range has been expanded to include SME loans and insurance products. New acquisitions have extended coverage up the continent’s eastern seaboard, but have required considerable integration efforts.

Step change in size of group

The results for the year to June 2017 show just how much the purchase of four banks from Opportunity International (OI) has increased MyBucks’ business, even though they were not consolidated for the full 12 months. New loans disbursements rose by more than half to €120m, helping to boost revenue from €38.8m to €53.7m. The net loan book at year-end June 2017 stood at €68.5m compared to €36.3m a year before.

Integration of new acquisitions burdens profitability

Underlying trading results at the established operations recorded modest growth in 2016/17 but this was more than offset by the heavy costs of integrating the OI banks, which drove the group’s continuing businesses into a net loss of €11.1m in 2016/17 compared to a loss of €0.6m in 2015/16. The OI banks are now operating at break-even after sharp cuts in running costs and reductions in funding costs, but there will still be heavy incidental costs and no positive profit contribution in the current year.

Valuation: Early days

While there are no earnings forecasts currently available, MBC’s early stage of development would make these less reliable than for a mature company, so book value may be a better valuation guide. MBC currently trades at a similar P/NAV per share multiple (c 5x) to Germany-listed fintech peers, implying strong growth expectations. Despite the losses in 2016/17, equity is sufficient to support current operations.

Consensus estimates (four years of historics if no consensus)



Net profit (€m)


























06/17 (prelim*)







Source: Company data; Note: *Some financial data are yet to be released.

Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.

New acquisitions double size of MyBucks

The preliminary figures for 2016-17 are dominated by the first-time consolidation of the business acquired from Opportunity International (OI) and the measures taken to integrate these into the group. The OI acquisitions have practically doubled the size of MyBucks’ business and the effect on the accounts has been correspondingly great. The new banks extend MyBucks’ operations up the eastern seaboard of sub-Saharan Africa with the potential to extend its tried and tested business model into new territories (Mozambique, Tanzania, Kenya and Uganda) once the immediate challenges have been surmounted.

Effect of Opportunity International banks on 2016-17 profits

The banks acquired from OI were typical of NGO-controlled entities with excessively high cost bases and cumbersome structures. It was clear from the beginning that MyBucks would have to take radical steps to make them economically viable. Initially, management had expected to provide for much of the inevitable costs involved in the opening balance sheet, but it transpired that as the measures were not decided on until after the purchases had been completed, IFRS demanded that they be taken against profits. This involved some revisions to the first half figures

The OI banks depressed group operating profits before financing costs by €4.3m in FY17 and contributed an after-tax loss of €5.1m. This more than offset a positive contribution to profits of €2.85m reflecting the discount to book value at which the OI banks were acquired. This has been adjusted down from the gain of €4.5m shown in the half year figures.

Group operating profits (pre-funding costs) were roughly maintained at €11m. The established operations showed a small underlying improvement in profits. Financing costs increased to €21.3m from €11.7m, which pushed the gross cost of funding up to 22.8% to 21.7%. In part this reflected the less favourable terms on which the OI banks had been operating. This has resulted in a full year net loss of €11.1m from continuing operations compared to a net loss of €0.6m in the previous year. Management has indicated that equity fell to around €20m because of losses from discontinued operations compounding the losses from continuing operations.

The negative contribution from the OI banks comprised current operating losses and one-off measures, chiefly from measures to reduce headcount but also the cost of reducing the physical infrastructure. It was also necessary to write off some of the OI loan book. The newly acquired business in Australia FairGo finance contributed a small loss.

The consolidation of the OI banks has also affected MyBucks’ reporting. It proved necessary to postpone the AGM originally scheduled for the end of November and the finalisation of the full audited accounts for 2016-17 has been delayed. Management expects that the accounts will be available at the end of this month, allowing the company to reschedule the AGM for some time in February. The preliminary statement gives only basic details and items such as the loss per share will only be available with the report and accounts.

OI effects continue into the current year

The OI banks have been brought to break-even at the operating level for the first time in their existence, but were still operating at a loss for the first few months of the current year. Moreover, integrating the newly acquired operations has involved a continuing high level of consultancy and professional costs, which are estimated at €4.3m for the year.

The current year will still be one of transition at the OI banks. Their cost bases remain high and it will take appreciable growth in their current volume of business to make for sustained profitability. The benefits of refunding their balance sheets on more favourable terms are only just flowing through. If these assets are able to achieve profitability similar to established operations, it is unlikely to happen before 2018/19.

After the losses reported in 2016/17, MyBucks’ equity fell to some €20m at end June 2017 from €35m a year earlier. This brings equity back to the level of end June 2016. The likelihood of another annual loss in the current year is high, which would further erode equity. Current shareholders’ funds will be sufficient to support operations even on the enlarged basis post the OI acquisitions, but any further significant expansion may require additional equity funding.

Growth initiatives continue

The efforts required to integrate OI have not held management back from pushing forward with initiatives to grow the business, notably in terms of new technology. MyBucks’ proprietary Haraka app provides instant loans. Clients can now borrow from MyBucks via WhatsApp obviating the need to download additional apps. In both cases MyBucks’ proprietary software can scan the clients’ smartphones to assess their creditworthiness. The company is soon planning to roll out a smartphone under its own brand in Africa. The hardware is being manufactured by ZTC and will sell for the very competitive price of US$28 equivalent.

MyBucks is also examining growth potential in the Far East using FairGo in Australia as a platform. The local, less developed markets show many of the characteristics of MyBucks’ core African territories in terms of low degree of penetration of classical banking services and cash dependency in the economy. Smartphone ownership, though, is already high, which should smooth the way for a roll-out of MyBucks’ model.

Valuation update

The shares had been trading at about €14 for most of the summer and autumn of 2017, but began to weaken notably as the postponement of the AGM fuelled investor concerns. As a result, the share price fell to the current level of around €9 in mid-December ahead of the news. However, the actual announcement of the preliminary results on 27 December did not appear to have hurt the share price, although the seasonally thin trading might have made this unrepresentative.

The shares are still trading at around 5x P/NAV per share in line with peers, but publication of the full details of results for 2016/17 may give important additional information on underlying performance.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244].

Any Information, data, analysis and opinions contained in this report do not constitute investment advice by Deutsche Börse AG or the Frankfurter Wertpapierbörse. Any investment decision should be solely based on a securities offering document or another document containing all information required to make such an investment decision, including risk factors.

Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Deutsche Börse AG and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt


London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York


Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues