Logiq Inc. (
NEO.LGIQ,
OTCMKTS: LGIQ,
Forum) an E-commerce company that’s quickly transforming how companies operate and compete for growth while boasting multi-faceted revenue sources. When Stockhouse last caught up with Logiq back
in late August, we were joined by company CEO Tom Furukawa to introduce our investor audience to this unique and innovative e-commerce company.
This time, Dave Jackson of Stockhouse Media sat down with company President Brent Suen to get us up-to-date with all the exciting, new happenings at Logiq Inc.
(Click image to play video)
TRANSCRIPT BELOW:
SH: To start off with, for those who may have missed Logiq’s first video podcast with CEO Tom Furukawa, can you tell us a little bit about yourself and the history of the company?
BS: Sure. So not to go back too far in history, but I did begin working on wall street in 1987 at Bear Stearns. So, I did spend a fair amount of time in the capital markets, primarily mergers and acquisitions, arbitrage and that was back during the heyday of the takeover world. I spent a few years traveling after that and then I landed in Silicon Valley where I invested in and advised early-stage tech companies back in the first.com boom. Subsequent to that, I moved to Asia, did the same thing mostly cross border M&A, cross border partnerships between e-commerce and software as a service (SaaS) company. In 2014 I was offered the opportunity to actually take over a public vehicle or public company, if you will, that we started off as Logiq and have built it up over the years through a combination of mergers and acquisitions and also just internal growth. I think it's referred to as organic growth but our own internal growth and imminent.
SH: Let’s start off with some great financial news from the company – Logiq’s Q3 2021 revenue exceeded $7.7 million dollars, and with your gross margin expected to expand to more than 29-percent…nearly doubling from 15.8-percent in the same year-ago quarter. What’s the secret sauce here?
BS: Okay. Well, I would quickly point out that during COVID, what we did as a team is we collectively looked at the situation and said, okay e-commerce is exploding. There are other avenues or areas of our business that are actually negatively affected by COVID. So, what can we do proactively to carry forward the things that are benefiting from the upsurge in e-commerce and then what can we do to restructure a reset and the things that are being sort of call it negatively affected by COVID? So, the team did a tremendous job in what I point to is okay. Revenues for this year over last year, the absolute revenues look a little bit flat but underlying that we have seen more than double the gross profit margins.
When we tell that story, I think it probably resonates a little better with call it institutional investors and analysts but I think for a retail investor what's important there. Okay, well, if you follow the path of revenues and you don't pay attention to the profit margins all you look for is that track upwards, right? So, this year, over last year, it looks a little flat but if you look at the fact that we doubled the profit margins, then the story there is, if you only looked at the top line, the revenue that's the equivalent of doubling the revenue. Okay. So, I would point that out more importantly, what it does for us is that going forward, when we really ramp up the top line revenues, that higher profit margin profile really starts to bring us towards profitability in the foreseeable future and I think that that's important to any investor.
SH: The company’s been very busy since we last chatted with Tom. First off, can you tell us a bit about your very recent partnership with Indonesian Bank B-P-R-S Insan Cita?
BS: Yeah, sure. Okay. So just for context, let me just rewind a little bit. Our initiatives in Indonesia are because of the fact that it is currently the number one emerging market. The growth that's happening there is, is unparalleled. There's a huge population, nearly 300 million people. Everybody has one of these, the smartphone and just kind of disappearing there with my virtual background but what's important in this emerging market is that the vast majority of people there don't have desktop and laptop computers. So, they skip that whole generation of devices. So, they've got this, well what do they do with that? They shop, they pay for things. They interact with people. They search for information. So, the whole way of doing things there, it really revolves around the smartphone. For us, we looked at that in given our roots in Asia.
We said, okay, how can we capitalize on this? So, we started off with an E-wallet, which we call PayLogiq. We followed up with that when a delivery app that we call go logic and then the third part of that is what's called micro finance. So, what's micro finance, micro finance is small amounts of money that you borrow in advance of your paycheck. Okay. Here in North America, we call it payday lending. You can also borrow against savings in a small amount, and you repay it. In Indonesia this is relatively new, people have not had the opportunity to do that. So, what we did is we have a local partner there that actually brought us into the social security administration because that group administers payroll for about 50 million individuals in about 600,000 small businesses.
They also administer the savings plans and other benefits to these people. So what we did is we said, okay, we've got an app platform that we can start to offer these micro finance services to this underlying community of people and after we announced that we began the integration work and we're in the middle of pilot programs now but this recent agreement with BPRS Insan Cita is the first of what we believe will be many other smaller and mid-sized banks that went to offer the same type of service to their existing customer base.
SH: Your Board of Directors just approved a plan to separate AppLogiq and DataLogiq into two publicly traded companies. Can you expand on this initiative?
BS: Absolutely. So, when investors look at our company at Logiq, what they see is two business units. So, one is AppLogiq and one is DataLogiq. Okay. So let me describe what they do real quick and then I'll discuss the rationale. So, app logic what we do is we enable small businesses to get on this device so they can, they can quickly create their own mobile site that their customers can look at inventory. They can look at products, they can buy products, they can have them delivered. So, it's basically an e-commerce or a mobile commerce app. Okay. That's what app Logiq does. With that we also do the initiatives in Indonesia on the wallet, the delivery app, the micro finance. So, all of that has AppLogiq. Okay. So, what do we call that?
In simple terms, we call that emerging markets financial technology or the buzz word is emerging markets FinTech but it's, it's that set of things, those things that we do our emerging markets FinTech, the other side of the business DataLogiq is online advertising, online marketing and online lead generation. Very simply put, we help small and medium-sized businesses that are already online find new customers in front of them. Okay. So, two types of business connected somewhat but as standalones, we have evidence from other publicly traded companies that you separate those two businesses and they stand alone, the valuation would be significantly higher. So, the board made the decision to split the company in two we're going to take AppLogiq public and another under another platform. So, investors in Logiq will continue to have shares of Logiq, which will then be a hundred percent DataLogiq that we'll continue to grow aggressively, and they will also receive shares of AppLogiq, which we will also continue to grow in both, I might add through act through merger and acquisition as well as internal growth.
SH: The company looks set for strong growth moving forward into 2022. How are you placed to expand operations to meet demand?
BS: In terms of teams and infrastructure. That's a good question, Dave, actually where we sit right now, we are comprised of individuals who have an average age in our late forties. I'm actually 54. I bring that up because what you see with a lot of early-stage companies is a lot of young, smart, talented people who then need to bring in the let’s call them, the gray hair, senior types to manage the operations because one thing that's missing with young teams is peaks and troughs. That can be economic cycles, that can be market cycles, it can be anything that takes you through these waves, nothing is a straight lineup. There's always a reset and unless people on that team have experienced a trough, unless they have navigated through it.
They don't know how and so one thing that I saw when I was in Silicon Valley that was very prevalent was a lot of young teams that didn't know what to do when the.com crash happened. So, they went out of business and the ones that prevailed were the ones who had either internal teams that had seen things like that before and knew how to navigate through them. We have all navigated through those multiple times. So, do we know how to intelligently scale? Yes. Are we in a position now where if our growth ramps up very quickly or we make an acquisition that's significantly larger and then the one plus one equals three or four or five, do we have to scramble? No, we are in a fabulous position now to where if we go out on a path and acquire multiple businesses that take us into the billion-dollar realm, we absolutely know we're doing
SH: I have to mention your stock has been on a very nice ride northwards since late October…up about 40-percent in a relatively short period of time. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good value buy right now?
BS: Sure, okay. Well, I would firstly point to comparable valuations instead of delving into the whole AppLogiq and DataLogiq spinoff. I'm just going to talk about it in a co cohesive view. So, let's just talk about Logiq. If you look at the companies that operate where we do and have business similar or competitive or complimentary certain products and services offerings. What you'll see is an average of about 26 times revenue, that's a multiple of revenue. Almost no one in our sector is profitable. So, the valuation multiple is based on revenue. Currently we're at about 2.3 times revenue. So, we're about one 11th of the peer group. After we separate the companies, separate the business in two, the valuations become even more interesting because the peers are significantly higher on one end and also in quite high on the other. So, any way you slice it, we are substantially undervalued. So, do I think that right now we're a very compelling investment? Yes. In fact, I bought shares in late August a little bit higher than where the price is now, and I consistently do that buy in the open market.
SH: What’s the long-term strategy for the company moving into next year and beyond, and what should retail, institutional, and private equity investors be looking out for?
BS: That's a good question, Dave. So, when people ask me the question, they say why did you start Logiq? What did you intend to create with this? It's not a solely personal answer. I would say it's more of a collective team answer and that is to build up what we currently have, become relevant in the market to where we can command a billion-dollar valuation. When you get to that point, what do you do with it? Well, you either continue to expand internally or you make acquisitions to then justify higher valuations. There are a number of companies in our industry sector that have successfully done that. I point to the Lightspeed as one. We met them last year. They had an $800 million valuation they're currently at about I think it's around 11 billion.
They've been as high as 17 billion. They did that through a combination of, of M&A and expansion financing. We can certainly follow that path. So, I think investors can certainly track that. Peek FinTech is another smaller one, all Canadian company. That's done a tremendous job in a very short period of time. Literally months they've gone from a low of $2 up to a high of 12. They uplisted, they've made two big acquisitions. I don't want to sound as if I'm boasting but I can say that knowing the teams at both of those companies and knowing my team on the M&A and strategic expansion side, our depth and breadth of experience is probably greater than theirs. We can execute, so we can absolutely continue to grow at a certain point. The good news is that as we continue to do that, there is a lot of consolidation that is happening and will continue to happen. So, we then ourselves would become an acquisition candidate. So, it is driving value. It's creating something with the business, creating value in the market and rewarding investors for rewarding us with a higher valuation
SH: And finally, Brent, if there’s anything I’ve overlooked please feel free to elaborate.
BS: Nothing that I can think of. I have historically said, do your homework, do your due diligence, look at our management team. You'll see people that should actually be at much larger companies because we've all been at larger companies. Look at the customer profile, look at the sectors of growth industries that we're in, look at the initiatives we've pursued and then look at absolute valuation compared to our peers, and I think a logical conclusion can be had very quickly. So yeah, I would leave it there.
For regular updates, visit
logiq.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.