Y Ventures Group Ltd: Building a platform of platforms August 3, 2018 806

PSR Recommendation: BUY Status: Upgraded
Target Price: SGD0.70
  • Luminore 8 Pte Ltd, a Y Ventures subsidiary, has launched a US$50m Initial Coin Offering (ICO) to fund the development of a global buying platform called AORA. It will allow users to purchase consumer products online using cryptocurrency.
  • We upgrade our NEUTRAL recommendation to BUY with an unchanged target price of S$0.70. Our upgrade is due to the recent price weakness. AORA is in its early stages, thus we are not changing our fundamental view on the Group. However, if successful, the contribution will be tremendous.

What is the news?

Luminore 8 Pte Ltd, a subsidiary of Y Ventures, announced a joint venture with Arke Blockchain Engineering Pte Ltd and has launched a US$50m ICO* of its AORA coins to fund the development and roll-out of AORA. AORA will be the world first blockchain-enabled global buying platform that allows users to purchase consumer products from any online store and marketplace with the option to use cryptocurrencies. The AORA Coin is a utility token built on the Ethereum network, to be the definitive token for e-commerce transactions.

*ICO – Initial Coin Offering is a fund raising mechanism, similar to crowdfunding but differs because the backers are motivated by a prospective return in their investments while the funds raised by crowdfunding are basically donations. ICOs are sometimes referred to as crowd sales.

What is AORA?

AORA is developed to address issues faced by consumers in trying to purchase merchandise not shipped directly to their country of residence. These issues may include the hassle of multiple log-ins into various platforms, high foreign exchange and handling fees charged by credit card companies or the platform, and the absence of protection in the form of insurance. In addition, AORA aims to provide a community-centric social market place where top volume products will be displayed on the platform based on  comments and reviews. To summarise, AORA is to become a buying concierge platform that provides consumers with a seamless and cost effective buying experience from other key platforms including Amazon, Taobao and Walmart, by mitigating the issues discussed above. The funds raised in the ICO will be allocated to research & development, marketing, legal and operational buffer.

What do we think?

We view this as positive. There are websites offering comparable services such as ezbuy. Ezbuy allows customers to copy URL to its website and purchase items otherwise unavailable in the residing country or language. However ezbuy’s ‘buy for me’ service require customers to complete multiple steps, when ordering the product and again for delivery. Our view is that AORA offers a more comprehensive, seamless and cheaper shopping experience. On ICOs, current market sentiment has been poor because many have either failed to raise the soft cap or failed to hold its value. To name some examples, Strykz, a token for fantasy football fans were unable to hit the soft cap while Traceto, an identity verification app saw its coin depreciate 50% in value. Nevertheless, if AORA is able to meet its soft cap, it signals that the crypto community and its investors are confident that a buying concierge platform is viable.  AORA ICO is expected to list on 1st Jan2019.

Upgraded to BUY with unchanged target price of S$0.70

We Upgraded our recommendation from NEUTRAL to BUY with an unchanged target price of S$0.70. Our upgrade is due to the recent price movements. Since AORA is in its infancy, we are not changing our fundamental view of the group. However, if successful, the value accretion will be tremendous.

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About the author

Profile photo of Alvin Chia

Alvin Chia
Research Analyst
Phillip Securities Research Pte Ltd

Alvin covers telecommunication and technology sector.

He graduated with a bachelor of commerce, majoring in Accounting and Finance from Monash University.

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