Investors in the United States have long known that conglomerate styles of corporate organization are not rewarded with high multiples since analysts want to cover companies that are as easy to understand as possible, and sometimes it seems like they want to do as little analysis as possible. Around the world, however, the conglomerate is a normal and accepted type of company structure, and small-cap investors need to scan the globe for opportunities.
Readen Holdings (OTC Pink: RHCO) is a Kong-Kong company that operates in numerous businesses such as fintech, telecommunications, electronic equipment production. The company also has an equity stake in a Turkish marble producer that was the product of a canceled real estate development deal, which sounds odd but is sometimes par for the course in the microcap world. Momentum seems to be on their side as they recently reported a revenue increase of 283% compared to their 2021 figures.
An important development for Readen is the launch of a venture called the OkeApp, which is a discount referral app associated with Oke Travel Club. Oke Travel Club is a membership service that provides travel products and services that provide members with discounts on purchases. In conjunction with the launch, Readen announced a partnership with a United States-based wholesaler to provide members with discounts of up to 50% on hotels, resorts, theme parks, and airfare worldwide. The company expects the OkeApp to eventually partner with over a million hotels, 200,000 retailers, 500 airlines, 60,000 restaurants, and 50 cruise lines. Company targets a total membership of 200,000 after 12 months, which would generate a monthly revenue of USD 2 million on membership fee only, along with extra revenues from merchants commissions and the Company’s own payment platform OkePay.
The new app and travel program will be integrated with the company’s payment processing technology called OkePay which processes payments from traditional credit card companies as well as newer vendors such as Alipay and WeChat Pay. Travel demand should be robust after the world has largely stayed at home for the past few years, and with an economic slowdown looming, demand for discount programs should also be strong.
The Oke ecosystem is a large focus for the company right now, but Readen can essentially be thought of as a publicly traded private equity firm. Other holdings include Chinese railway technology, fresh food distribution in Europe, Hong Kong, and New Zealand, and diversified media services in Asia. Readen is an interesting way for investors to gain simultaneous exposure to the fintech sector including emerging payments, travel, building materials, and media. The company is microscopic, with only a $4.5 million market capitalization but if its portfolio has some hits, could grow rapidly. Recently they just announced a deal sell just 20% of their subsidiary (Ares Technology) for approximately $3.7 million. Readen is a bit of an oddball, and pink sheet stocks carry outsized risks, but investors that are willing to dive headfirst into understanding the fintech and travel sectors may want to give it a look.
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