YuuZoo share rally continues

Singapore

INTERNET stock YuuZoo on Monday extended its share price rally from Friday, closing the day 13.6 per cent or S$0.04 higher at S$0.335.

The stock opened trading one Singapore cent higher at S$0.305 and reached the day's high of S$0.35 by noon. Its intra-day low was S$0.30. Nearly 103 million shares changed hands, making it Monday's most actively traded stock.

YuuZoo had in recent weeks risen steadily from a low of about S$0.20 on April 27 to S$0.335 on May 25. Last Friday's session alone saw the stock surge S$0.07 or 31 per cent to S$0.295 on a volume of 90.2 million shares, after the company highlighted a research report by UK research firm Edison Investment Research.

The report - said to be the first substantial report conducted on the company - was commissioned by YuuZoo to educate the market on its unique social networking, e-commerce and franchisee model, founder and CEO Thomas Zilliacus told BT. "We're a new company that only recently (September 2014) listed on the SGX Mainboard; we hope to generate additional research and analysis following this report," said Mr Zilliacus.

YuuZoo got its listing through a reverse takeover of W Corporation. While the Edison report did not carry a formal investment recommendation, it projected a discounted cash flow-based price range of S$0.35 - S$1.25 per share.

YuuZoo's current low rating, said the report, reflects its historic business-to-business (B2B) focus and early stage in developing its business-to-consumer (B2C) network business.

The report added that YuuZoo's strategic partnerships with seven franchisees spanning some 68 countries should contribute from 2015, and that its revenues will "broadly double" in each of the next two years.

YuuZoo runs a virtual shopping mall - that combines social networking, e-commerce, gaming and payments - for businesses and consumers. It recently evolved from an earlier franchisee model where it received a one-time cash fee for the licence and a fixed revenue share on all future income to a new model where the franchisee pays YuuZoo for the licence by issuing shares in the company.

"By taking minority stakes in unlisted companies, YuuZoo is gearing up its exposure to the success of these franchisees and, in the longer term, YuuZoo may be able to realise additional value from these investments," said the report.

But it noted that this approach also exposes the company to potential losses if a venture is not successful. Said Mr Zilliacus: "YuuZoo's franchisee model, like any franchisee model such as McDonald's or Starbucks', faces this risk. While we have little direct control over our franchisee's strategy or performance, we try to mitigate this by working very closely with our franchisees and ensuring ongoing communication, training and support."