The fin shares the same view... 99 Wuxian signs payments deal...

The fin shares the same view...

99 Wuxian signs payments deal with UnionPay

PUBLISHED: 27 OCT 2014 23:55:33 | UPDATED: 28 OCT 2014 08:45:08

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99 Wuxian’s registered users grew by 6 million in the September quarter to 37 million.  Photo: Bloomberg
SALLY ROSE
Shanghai-based mobile marketplace operator 99 Wuxian is one step closer to its goal to outgrow the Australian market and listing overseas after inking a partnership deal with China’s UnionPay that could expose the e-commerce platform to 4.5 billion Chinese bank card holders.
The two parties have signed an agreement to co-develop and launch a new cloud-based point-of-sale platform.
99 Wuxian, which operates in China, currently has 37 million registered users. It hopes by becoming the first e-commerce platform to launch a mobile payments system with UnionPay to be exposed to the Chinese financial services giant’s 4.5 billion cardholders. If successful the deal could be a game changer for 99 Wuxian.
UnionPay, which is backed by the People’s Bank of China, has a monopoly on bank card transaction clearing throughout the People’s Republic of China – excluding Hong Kong and Taiwan.
But the Chinese payments behemoth has been losing market share on overall transactions as more transactions move online. About $US350 billion ($397 billion) of transactions were processed online in China last year. But the biggest Chinese e-commerce platforms, such as Alibaba and Tencent, have their own payment systems that mean UnionPay loses out on getting a bit of the transaction in the same way they would with an in-store purchase.
The 99 Wuxian payments platform will give UnionPay a commission, probably of between 1 per cent to 2 per cent. The cost of developing the new mobile payments system will be split between 99 Wuxian and UnionPay. It is scheduled to go live in mid 2015.
99 Wuxian entered a trading halt ahead of unveiling a partnership deal on Monday. The agreement is expected to be announced to the market before the Australian Securities Exchange starts trading on Tuesday morning.
Within months of 99 Wuxian’s ASX-listing, chairman Ross Benson was talking up the potential for the company to move to a larger bourse. It is understood the company is in the final stages of inking a deal with a major US investment bank to manage a NASDAQ float next year. That mandate is expected to be announced in the coming weeks.
It is an emerging trend for foreign technology companies to view the ASX as an alternative to venture capital funding and springboard in to larger markets. Earlier this month, online human resources platform 1-Page became the first Silicon Valley tech start-up to list on the ASX with a stated aim of using it as a launching pad to the NASDAQ.
99 Wuxian made headlines a year earlier October 2013 when it became the first Chinese company to list on the ASX. After making its debut at 40¢, the stock climbed more than 70 per cent to an all-time high of 69¢ in July. But since then the stock has pulled-back more than 40 per cent, with the company raising $25 million from local investors in August. By the time 99 Wuxian entered a trading halt on Monday, the shares were back to their listing price at 40¢, giving it a market capitalisation of $428 million.
Foster Stockbroking executive director Haris Khaliqi reiterated his “buy” rating on 99 Wuxian earlier this month, when the share price was around its nadir, in response to the company’s September quarter trading update. “Registered users grew by 6 million in the September quarter to 37 million, which was up on the average of 2.3 million new users per quarter during the year,” Mr Khaliqi said.
“The company also showed in a steep jump in the total number of transactions on the platform to 9.2 million, up from 5.5 million in the prior quarter”. Mr Khaliqi also pointed to an increase in the value of transactions being processed. Gross transaction value increased to $344 million for the September quarter, representing 9 per cent quarter-on-quarter growth and 49 per cent year-on-year growth. Platform revenue increased to $7.9 million for the September quarter, representing 4 per cent quarter-on-quarter growth and 25 per cent year-on-year growth. Platform margin remained stable at 2.3 per cent.”