NNW model is actually very simple but board and managementlike to be opaque and are simply not helping investors. NNW main business is tooperate an M-commerce website which is embedded into around sixty Chinese banksapps and websites. Only high quality retailers and providers are permittedsince only genuine goods and services are sold. The banks will reimburse unhappycustomers like credit card companies do in Australia. This is in comparison topot luck on Alibaba with all its fake goods.NNW takes a small clip on sales and amazingly NNW isvirtually part of the Chinese payments system like a bank. NNW books large salesrevenue and large COG when only taking a very small percentage hence the astronomicnumbers. NNW offers customers to redeem points, like frequent flyer but issuedby banks. This is high quality business (with virtually no credit risk) andvery profitable however NNW needs to finance the points redemption amount foraround a month before receipt of points money from the banks hence all thefactor lines. Eventually the banks will reduce this waiting period since it’sin the bank’s interest to have these mountains of points redeemed.
NNW now has 80m users – that’s three times Australia’spopulation. NNW probably has more customers than any other listed companyoutside China. Internet companies used to be valued on a per customer basis andon this basis NNW looks remarkably cheap. Because of the board opaqueness and generallack of investor interest I expect NNW to migrate to HK or Shanghai exchanges.
