First Read: Wise "Further thoughts - Wise US OCC charter denied" (Buy) Forsythe

研报英文原文证据摘录

First Read: Wise "Further thoughts - Wise US OCC charter denied" (Buy) Forsythe

Forecast returns

Forecast price appreciation 32.5%

Forecast dividend yield 0.0%

Forecast stock return 32.5%

Market return assumption 9.3%

Forecast excess return 23.1%

Company Description

Wise is a UK-based FinTech founded in 2011. The company provides personal and business

users with low-cost, transparent, cross-border currency transfer services and multi-currency

bank accounts.

Valuation Method and Risk Statement

Risks to our rating and target price include: 1) another cross border payment rail (network)

emerging (i.e., CBDCs, blockchain, Visa Direct) and impacting the differentiation of Wise's

proprietary tech stack; 2) drastic moves in interest rates will negatively impact operating

results should it occur; 3) as a consumer facing application it is possible that consumer

preferences change or their experience or interface becomes outdated over longer time

frames (requiring consistent innovation); 4) cost of sending remittances increases drastically

due to moves in FX prices which Wise is not prepared for. For valuation, we employ a

multiples based approach to our valuation, using a SOTP of core EBITDA (operating EBITDA)

and interest income, and apply a different multiple to each. Given the cyclicality of interest

income, and our current path in the interest rate term structure, we appear to be peaking,

meaning EBITDA growth is likely to be impacted by lower rates in the future (and therefore

should be attributed a lower multiple due to uncertainty of cash flows). We apply a multiple

to our core EBITDA, considering its historical multiple, and industry peers (who are not the

most comparable admittedly). Whilst normally we would apply a multiple to growth, when