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Sohn Investment Conference: Tekne Capital’s Beeneet Kothari eyes Chinese payments stock

Australian investors will be very familiar with potential gains that can be created from innovations in the payment system, think Afterpay. In China, the mobile payments market is both enormous and advanced in technical terms, that’s where Yeahka Ltd operates — a top stock choice from Beeneet Kothari of New York-based Tekne Capital Management at the SOHN Hearts & Minds Investment Conference 2020.
James Kirby
The Australian
Nov 13, 2020

Put simply, Yeahka (pronounced yeek-ah) is a technology platform that sits smack in the middle of China’s flourishing mobile payment system, where a string of competing payment services such as WePay or AliPay compete at the merchant terminal to service online shoppers.

According to Kothari, the power of Yeahka is that while it pulls in the payments across China it then packages and resells the lucrative collected data back to the same merchants using the system.

For Kothari, the company also offers two key attributes investors like to see: what Warren Buffett likes to call a “moat” (or a high barrier to entry), along with management having skin in the game.

China keeps a very tight rein on licences in its system, indeed there have been no new licenses issued in four years. Separately, the dramatic suspension of the Ant Financial IPO, which would have been the biggest IPO in the world this year, proves the point pretty well.

No doubt the heavy hand of China’s regulatory authorities can be either a plus or a minus for companies dependent on a business inside China, but that is an obvious risk here along with the still evolving shape of China’s broader equity market.

Kothari believes Yeahka’s “moat” is its recently renewed licence to operate inside China.

Meanwhile, the founder of Yeahka is Luke Liu, who just happens to be the guy who created Tencent’s successful move into payment services. Liu still holds 40 per cent of the company.

Certainly the numbers are attractive. The company revenues are growing at 40 per cent a year, yet it trades on only two times revenue — less than Australians might pay for a conventional mid-cap ASX industrial stock. It is also profitable and trades on nine times earnings before interest and tax.

As Kothari says: “we believe this stock can double or triple from here.”

This article was originally posted on The Australian here.

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