DS Investment & Securities analyzed on the 4th that Hecto Financial's stock price is currently undervalued, expecting new business opportunities such as the introduction of the 'Seller Advance Payment' service.
Nam Min-wook, a researcher at DS Investment & Securities, stated in a report on the same day, "Recently, an MOU was signed with PingPong Payments, Amazon's PSP, regarding the introduction of an 'advance payment solution,'" adding, "It is expected that the 'advance payment' service will be introduced as early as the second quarter."
In the past, sellers typically took about two weeks to receive settlement payments. The advance payment service structure involves prepaying up to 80% of the sales proceeds within 24 hours and charging a certain fee, which is a kind of interest. Since the sales receivables are collected from the seller and the payment is later received from Amazon, it is judged that the default risk is practically low.
He explained, "The foreign exchange risk is also borne by the seller," and added, "Considering the two-week settlement cycle, the scale of advance payments that can be covered annually with the current cash level is about 1 trillion KRW."
He also analyzed that the potential customer base consists of global PSP merchants through indirect contracts. He said, "Overseas settlement solutions proceed with indirect contracts with PSPs rather than direct contracts with cross-border platforms. These merchants usually adopt two or more PSP companies, similar to large domestic merchants," and added, "Therefore, competition among PSPs is fierce, and from the merchant's perspective, an attractive solution acts as the PSP's sales power. In other words, overseas merchants of global PSPs are the potential customer base."
He further added, "The current stock price is 10.5 times the expected price-to-earnings ratio (P/E) for this year, and the recent price decline is excessive."
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