Visa Inc (V), eBay Inc (EBAY): A 2013 IPO That’s Cashing In on Russia’s Cash-Based Economy

Page 2 of 2

Yandex NV (NASDAQ:YNDX) generated $6.1 million from Yandex NV (NASDAQ:YNDX).Money in the second quarter, accounting for about 2% of its overall revenue. This compares to the $16.2 million Qiwi generated from its wallet unit in the first quarter (Qiwi’s second quarter results haven’t been announced yet).

PayPal has reportedly finally received approval to operate as a full-fledged payment operator in Russia. However, analysts believe it will be tough for it to compete with Qiwi, which has a strong brand name and the home turf advantage. Qiwi’s management has been quoted as saying the company could partner with potential competitors. A Qiwi-PayPal partnership would make sense.

The numbers

Company Market Cap Trailing P/E Forward P/E 5-Yr PEG Operating Margin (ttm) ROE (ttm) Debt to Equity (mrq)
Qiwi $1.6 B 40.5 21.8 1.4 19.6% 27.4% Close to nil

Source: Yahoo! Finance; data to Aug. 2.

Revenue and EPS rose 32.4% and 364%, respectively, in the first quarter.

Management’s guidance is for 2013 revenue to increase 23% to 26%, and earnings to increase 27% to 33%. Guidance is considered by at least one analyst to be conservative. That makes sense given Qiwi is not only a newly public company, but one of the very few Russian companies trading on a major U.S. exchange. Management, no doubt, wants to build investor confidence.

Bottom line

Qiwi’s combination of kiosks and virtual wallets provide it will a profitable niche. Its business should continue to benefit as Russians increasingly use the Internet and mobile devices to pay bills and make purchases.
Russian e-commerce is still in its early stages; however, it’s expected to grow 27% annually through 2015, according to McKinsey.

At this stage, it appears there’s enough business to go around for Qiwi and its main competitor, Yandex NV (NASDAQ:YNDX).Money. However, the competition situation needs to be monitored. A Qiwi-PayPal partnership could help Qiwi leverage its distribution network, and keep Yandex NV (NASDAQ:YNDX) Money at bay.

The article A 2013 IPO That’s Cashing In on Russia’s Cash-Based Economy originally appeared on Fool.com is written by BA McKenna.

BA McKenna has no position in any stocks mentioned. The Motley Fool recommends eBay, Visa, and Yandex. The Motley Fool owns shares of eBay. BA is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2