30 August 2015

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Asia Financial Services

Covering all aspects of financial services in Asia from banking in China to algo trading in Japan.
A post relating to this item from Finextra:

VerifySmart targets Philippines remittance market with i-pay deal

27 October 2009  |  3103 views  |  0
VerifySmart (VSMR: OTCBB): ("VerifySmart" or the "Company"), a global leader in secure and fraud free credit and debit payment processing services, today signed a 50-50 revenue sharing agreement (the...

VerifySmart - a PUMP and DUMP scheme

28 October 2009  |  5678 views  |  0

I found this great analysis concerning this VSMR new release :

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=42938028

Another outrageous revenue projection 

"Based on the current $22B annual spend on in-bound remittance transfers in the Philippines today, the Company estimates a conservative one percent share of the market, gained over two years - or $10M USD net gross to VerifySmart." 

First, one-half of 1 percent market share of a $22B annual spend is equal to a dizzying $110 million USD, not $10M USD. 

Secondly, even if VSMR made a mistake with this calculation, what it means is that they are projecting to make 10% fee revenue ($20M USD) out of the their projected 1% market share with in-bound remittance of $22B. And indeed they say that $10M USD is net gross to VerifySmart.
 

Why does this not make sense? 

First, let's define what a pump and dump is. 

The long term pump and dump is generally a company-orchestrated manipulation, which will often result in a class action lawsuit and eventual regulator intervention. The scenario is an intentional manipulation of the corporate stock over a period of time, which could be anywhere from three months to as long as two years. The company releasing profit projections, which reveal an untrue projection of upcoming quarterly revenues, could initiate a short-term pump and dump. Glowing revenue projections attract new buyers and the stock price goes up. 

Then, let's check if a 10% fee revenue is realistic. 

According to estimates, the average fee charged from a client for a money remittance via MTOs abroad was 3.3% of the remittance sum in 2008. 

Since, a recipient bank is necessary to receive these funds, I find it hard to believe that the bank would forego the revenue associated to money remittance and give it to a venture such as I-PAY commerce ventures and VSMR. In the money remittance business, the banks take the lead and it also has to comply with numerous regulations such as AML, etc. Whatever VSMR has to offer is merely an accessory to the bank's operations. 

Based on all of the above, it is safe to say that the 10% fee revenue projected by VSMR is completely unrealistic. 

Lastly, I think it is also wise to question why all these press releases from VSMR which always broadcast glowing revenue projections are one-sided. Where are the joint statements from the other 'partner' companies acknowledging these outrageous revenue projections?

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