Chimpchange Ltd

Buy

Digital Disruptor
Software & Services / Data Processing & Outsourced Services

21 July 2016

Event

Company Update
Ticker

CCA

Stock Price

$0.690

Target Price

$1.200

Forecast Capital Return

73.9%

Forecast Dividend Yield

Initiating coverage on ChimpChange (ASX:CCA).

Overview

0.0%

Estimated Total Return - 12 Mth Forward

73.9%

Company market data

Market Cap.

$43.8m

Free Float (%)

68.5

Enterprise Value
52 Week Range

$0.48 - $0.73

Shares Out.

63.5m

Avg. Daily Value

$0.2m

Estimates changes

2015a

2016e

2017e

2018e

Core NPAT - new

(2.2)

(6.5)

(5.4)

0.6

Core EPS dil. () - new

(2.8)

(8.3)

(7.0)

0.8

0.0

0.0

0.0

0.0

DPS () - new

$40.8m

All figures are in US Dollar unless otherwise specified.

Share price performance

Chimpchange Ltd vs. AS51 (rebased index)

Digital Disruptor: ChimpChange is a digital banking

platform targeting the Millennial and Underbanked market
segment in the US. CCAs fee-free/low-fee, highly polished
banking platform overcomes significant frictions faced with
existing banking products, making it highly appealing to
customers.
Rapid Customer Growth: Still at its early stage,
ChimpChange has over 87,000 customers currently, with IPO
initiatives paving the way to triple this by the end of 2017.
Multiple Revenue Streams: Interchange revenues are
already being produced by ChimpChange customer
spending, using transaction account Debit Cards. Additional
revenues are growing rapidly, with Out-of-Network ATM
fees and Photo Cheque Processing providing additional
monetisation.
Highly Scalable: As the number of customer accounts and
deposits grow, the economics of ChimpChanges digital
banking platform are highly attractive. The existing app is
sleek, with robust systems backing the platform, allowing for
rapid scaling at small marginal costs. This entails growing
incremental earnings and sustainably high margins.

Investment View
ChimpChange has entered a period of rapid growth and is positioned
as a key digital disruptor of the US Banking industry. Management
has consistently delivered on key operating metrics, and the
economics of the business are improving month by month.
Given the early stage of the company, we recognise that potential
future earnings may fall across a wide range. However, we view an
investment in ChimpChange as representing strong value under a
range of probable scenarios.
We initiate with a BUY Rating and a 12-month forward price target
of $1.20
Analyst

Y/E Jun 30

2015a

2016e

2017e

2018e

Benjamin Atkinson

EBITDA

(2.2)

(6.6)

(5.7)

1.1

+61 2 8288 5422

EV/EBITDA

nm

nm

nm

35.5x

benjamin.atkinson@moelis.com

Core NPAT

(2.2)

(6.5)

(5.4)

0.6

Core EPS (Diluted) ()

(2.8)

(8.3)

(7.0)

0.8

nm

nm

nm

68.7x

260.4%

198.5%

(16.0%)

(110.9%)

0.0

0.0

0.0

0.0

0.0%

0.0%

0.0%

0.0%

P/E
EPS growth
DPS ()
Yield
DPS growth
Dividend Payout Ratio

All figures are in US Dollar.

Moelis Australia Securities Pty Ltd

AFS Licence 308 241

0.0%

0.0%

0.0%

0.0%

Contents
Executive Summary ..................................................................................... 3
Investment Opportunities ............................................................................................... 3
Investment Risks .............................................................................................................. 3
Valuation ........................................................................................................................... 3

Company Overview .................................................................................... 4

Digital Banking Platform ................................................................................................ 4
Monetisation ..................................................................................................................... 5
Future Opportunities ....................................................................................................... 6

Key Drivers ................................................................................................... 7

1.

Growth in Customers ............................................................................................. 7

2.

Deposits Base ........................................................................................................... 8

3.

Transaction Volume & Spend ............................................................................... 9

4.

New Product Offerings .......................................................................................... 9

5.

Marketing Initiatives ............................................................................................ 10

Industry Overview .................................................................................... 12

US Banking...................................................................................................................... 12
Digital Banking ............................................................................................................... 14
Key Competitors ............................................................................................................ 16
Listed Comparable Companies .................................................................................... 17
Competitive Framework ............................................................................................... 18
Comparable Transactions ............................................................................................. 19

Financial and Operating Metrics ............................................................ 20

Projections & Assumptions........................................................................................... 20
Cash Burn ........................................................................................................................ 23

Valuation & Investment View ................................................................ 24

Investment View ............................................................................................................ 24
Discounted Cash Flow Valuation ................................................................................ 24

Appendix I: Key Risks .............................................................................. 26

Appendix II: Board and Senior Management ...................................... 27
Appendix III: American Household Budgets Infographic ................ 30
Financials .................................................................................................... 31

Executive Summary
Investment Opportunities
ChimpChange is a
scalable, high-growth,
digital banking disruptor

ChimpChange has entered a period of rapid growth and is positioned as a key

digital disruptor of the US Banking industry. Management has consistently
delivered on key operating metrics, and the economics of the business are
improving month by month.
Given the early stage of the company, we recognise that potential future earnings
may fall across a wide range. However, we view an investment in ChimpChange as
representing strong value under a range of probable scenarios. Highlights include:

Digital Disruptor: ChimpChange is a digital banking platform targeting

the Millennial and Underbanked market segment in the US. CCAs feefree/low-fee, highly polished banking platform overcomes significant
frictions faced with existing banking products, making it highly appealing
to customers.

Rapid Customer Growth: Still at its early stage, ChimpChange has over
87,000 customers currently, with IPO initiatives paving the way to more
than triple this by the end of 2017.

Multiple Revenue Streams: Interchange revenues are already being

produced by ChimpChange customer spending, using transaction account
Debit Cards. Additional revenues are growing rapidly, with Out-ofNetwork ATM fees and Photo Cheque Processing providing additional
monetisation.

Highly Scalable: As the number of customer accounts and deposits grow,

the economics of ChimpChanges digital banking platform are highly
attractive. The existing app is sleek, with robust systems backing the
platform, allowing for rapid scaling at small marginal costs. This entails
growing incremental earnings and sustainably high margins.

Investment Risks
The primary risks to ChimpChange are summarised as follows (detailed later in the
Key Risks section):
Rate of Customer Adoption and use of the ChimpChange platform
Loss of Customers

Partner Relationships and Contractual Risk

Reliance on Key Personnel
Research, Development and Intellectual Property Rights

Technological Development
New Products/Services
Regulatory Risk
Security Breaches

Valuation
We initiate coverage of CCA with a BUY rating and a 12-month forward target
price of $1.20 per share, representing an estimated +73.9% total return over the next
12 months.
3

Company Overview
Digital Banking Platform
ChimpChange is a digital banking platform, primarily
and Underbanked demographics in the US. The US
rapidly changing environment, brought on by
advancement. Banking customers now demand more

targeted at the Millennial

banking industry faces a
disruptive technological
features, with online and

smartphone accessibility.
Figure 1: ChimpChange vs Traditional Banking

ChimpChange overcomes
the frustrations of
traditional banking by
offering a simple, feefree/low-free banking
experience

Source: Prospectus

ChimpChange offers a product that removes the frustrations of traditional banking,

all in one simple and free platform.
Figure 2: ChimpChange Features
Network of

Instant P2P

Mobile

24,000 ATMs

money transfers

cheque clearing

Deposit & withdraw cash at

Check account balance &

Social media features such

retail & convenience stores

transaction history

as photo and video

Debit Card

The ChimpChange
platform allows users to
deposit, withdraw, and
transact with their funds
in a range of convenient
ways

Source: Prospectus, Moelis Analysis

Figure 3: ChimpChange Prospective Features

Additional features are

being developed,
increasing the value-add
to customers as well as the
monetisation opportunity
to ChimpChange

Personal
budgeting tools

Savings accounts

Bill payments

Source: Prospectus, Moelis Analysis

Monetisation
The ChimpChange platform is currently generating revenue from its customers in 3
key ways; interchange fees, ATM fees and inactivity fees, with new products
coming that will deliver additional revenue opportunities.

Interchange fees comprise

over 80% of CCAs
revenues, driven by the
volume of customer
deposits

1. Interchange Fees
Merchant service fees are charged for the handling of electronic payment
transactions using debit cards. Merchants are charged a percentage of each
transaction, as the issuing and acquiring banks assume all the risks on each
transaction.
Figure 4: ChimpChange Features

Source: Prospectus, Moelis Analysis

The interchange fee received varies by nature of the transaction (online, in-store,
pin, swipe), with ChimpChange receiving fees in the range of 1%-2% of the
transaction value.

Active customers typically

make 1 in-network and 1
out-of-network ATM
withdrawal a month

2. Out-of-Network ATM Fees

ChimpChange does not charge a fee for ATM withdrawals at any of its 24,000
network locations. Customers who withdraw money from ATMs outside this
network are charged a fixed fee of US$1.95 per domestic withdrawal by
ChimpChange (and $3.50 for an International withdrawal). To date, a typical
active account holder will make 2 ATM withdrawals per month, half within the
network and half outside the network.

The ChimpChange
platform lends itself to
further monetisation
opportunities

3. Other Products
The ChimpChange platform lends itself to a number of additional offerings that
will be rolled out as developed. Prospective features such as mobile cheque
clearing, budgeting tools, foreign exchange and bill payments are just a few
examples of value-added features through which ChimpChange may generate
additional revenue.
Though not a core driver of value, inactivity fees are charged to users who do
not transact on their debit card for two consecutive months.

Figure 5: Schedule of Fees

Source: Company, Moelis Analysis

Future Opportunities
The primary focus of ChimpChange currently is to deliver its core banking offering,
driving customer deposits and transactions. As the customer base grows, further
monetisation opportunities will be developed. Prospective features include:
Photo Cheque Processing
Budgeting Tool

Savings Tool/Insights
Bill-Pay
International expansion
6

Key Drivers
1. Growth in Customers
Millennials are the
generation that comprise
18-34 year olds, a.k.a.
Generation Y

ChimpChange operates in the US retail banking sector, with a key focus on the
Millennial and Underbanked demographics. The broader global mobile payment
industry is rapidly growing, with ChimpChange offering a digitally disruptive,
value-added service within this industry.
Figure 6: Global Mobile Payments (US$bn)

1,200
1,000
800

600
400

200
2012

2013

2014

2015

2016e

2017e

2018e

2019e

Source: Prospectus, statista.com, nfcworld.com

Given the currently low penetration of digital banking in the US market, there is
significant opportunity for ChimpChange to gain customers in the millennial and
underbanked market segments. The chart below (shown on logarithmic scale)
illustrates the huge addressable market relative to existing digital banking
adoption.

Millennials represent 73%

of CCAs user base

Figure 7: US Banking ChimpChange Customers and Digitally Banked Users relative to Addressable Market

US Banking

250,000,000

Millennials

92,000,000

Underbanked

50,000,000

Digital Banking Users

2,000,000

ChimpChange Customers

87,000
-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

Source: Company Prospectus, Moelis Analysis

2. Deposits Base
Of a customers total
deposits in a given month,
they will typically spend
70% through transactions
and 25%-30% through
ATM withdrawals

ChimpChange has a number of initiatives that encourage users to increase the

deposit base held in their ChimpChange accounts. A core aspect of this driver is
encouraging users to have their wages deposited directly into their ChimpChange
accounts marketing campaigns such as a bonus $25 (for 3 consecutive months of
depositing over $500) is driving users to adopt these behaviours.
Figure 8: Quarterly Deposit and Purchase Volumes (US$m)

Source: Prospectus

ChimpChange makes it convenient to deposit funds into an account in a variety of

ways, with many users embracing convenience-store based cash deposits, in
addition to traditional electronic transfers.
Figure 9: Sources of Deposited Funds (%)

Direct deposits of wages

into a users
ChimpChange account
will drive average deposit
values upwards

Source: Prospectus

3. Transaction Volume & Spend

ChimpChange users typically have a high monthly turnover of funds deposited,
with ~98% of monthly deposits either spent via transactions or withdrawn from
ATMs. As CCA generates revenue at each transaction, high rates of spend turnover
increases the monetisation of the deposit base.
Figure 10: Transaction Volumes (US$m)

Transaction volumes are

closely related to deposits,
as a typical customer will
spend 70% of their
monthly deposits via debit
card transactions

Source: Prospectus

As CCA derives a percentage-of-value interchange fee from merchants, the

company benefits not only from an increased number of transactions, but also from
a higher total value of expenditure. By issuing debit cards and encouraging users to
set up their ChimpChange accounts as their go-to daily bank account, the average
spend per transaction is likely to increase, further boosting interchange revenue.

4. New Product Offerings

As the existing ChimpChange functions are adopted, customers may benefit from
future features added to the platform, which also affords the company additional
monetisation opportunities. New and prospective features include:
Mobile Cheque Processing
is now up and running on
the ChimpChange
platform, with the initial
natural adoption rates a
positive indication of the
features value

Photo Cheque Processing: Feature added as of July 2016. In the US,

cheques account for ~13% of all non-cash payments, at US$17 billion a year.
The ChimpChange platform allows users to take a photo of a cheque using
their smartphone, loading the funds into their account. Over 95% of users
typically select the immediate-clearing option, for which ChimpChange
generates a 1% fee.

Budgeting Tool: A budgeting tool allow users to track their spending

habits to better manage their funds. This feature is particularly useful to
millennials, with less experience in managing budgets. Millennials are also
more willing to adopt the use of digital budgeting tools, providing
ChimpChange with a wealth of valuable data on customer spending and
savings habits. Such information may be leveraged in the future for a range
of financial products.

Bill-Pay: A prospective feature is the introduction of Bill-Pay, similar to the

Australian BPAY mechanism. Similar to interchange fees, ChimpChange is
able to generate revenues in line with transaction volumes.

ChimpChange will
increasingly become a onestop platform for everyday
banking needs

Savings Account: ChimpChange may introduce a savings account feature,

allowing users to build their savings further by earning interest. Redeployment of savings funds, for example with lending products, provides
monetisation opportunities should this feature be introduced.

International expansion: The ChimpChange platform is simple, effective

and easy-to-use, and whilst it overcomes some of the key frustrations
present in the US banking market, its appeal may find demand in other
international markets, should CCA decide to expand.

5. Marketing Initiatives
Following the IPO, ChimpChange is well capitalised to roll-out its marketing
strategy to attract new users to the platform. Given the target demographic and the
nature of the ChimpChange app being mobile-based, the primary channels through
which ChimpChange is marketed are social media outlets, such as Facebook,
Twitter and Instagram.
Figure 11: ChimpChanges Social Media Advertising

The social media campaign

is proving highly
successful, with key ads
attracting high-value
customers at a low CAC

Source: Company

ChimpChange will roll out an initial marketing budget of $100-200k a month, with
early signs showing an average customer acquisition cost (CAC) well below the
expected level, and considerably less than the industry average.

10

Figure 12: Average Customer Acquisition Cost (US$)

$350

$350

$300
$250
$200
$150

$150

$100
$50

$16.50

$25

CCA - Since IPO

CCA - Target

$0

US Banking Industry

Source: Prospectus, Moelis analysis

11

Industry Overview
US Banking
The US Banking industry is characterised by a large number of localised branch
networks, traditionally with physical branches across a given region. There are over
5,000 FDIC-insured commercial banks in the US, holding approximately $10.6
trillion in deposits.
Though large, the US
Banking system has been
slow to adopt digital
solutions

Despite its immense size, the US banking industry is still in its digital infancy. This,
coupled with regulatory constraints, has formed a banking environment burdened
with cost frictions. Monthly account keeping fees and transfer fees are
commonplace, entailing material costs to those with lower account balances.
Figure 13: Comparison of Monthly Maintenance Fees

Monthly Account

Financial Institution

Account Type

Bank of America

Core Checking Account

US$12

Wells Fargo

Everyday Checking Account

US$10

Chase

Everyday Checking Account

US$12

Citibank

Basic Checking Account

US$12

HSBC

Choice Checking

US$15

ChimpChange

Mobile Banking Account

Keeping Fee

Free

Source: Prospectus

Figure 14: Average Annual Account Fees for a Typical US Bank Account

Account Keeping
Fees
$120

$0

$100

ATM Fees
$52

Overdraft Fees
$260

$200

$300

$400

Source: Prospectus

Regulatory Environment: Dodd-Frank Reform Act

As a response to the Great Recession/Financial Crisis of 2007-08, the United States
government brought about a number of regulatory reforms relating to the financial
services industry. Specifically, the Durbin Amendment was passed, which limited
the amount of interchange fees that a bank may charge from a single debit card
transaction.
Notably, the law applies only to those banks with over $10 billion in assets.
Accordingly, smaller banks and digital banking start-ups are not required to
regulate interchange fees under the Durbin Amendment.

12

Prior to the Durbin Amendment, fees were unregulated, with the fee banks were
receiving per transaction averaging around 44 cents. The Federal Reserve Rule went
into effect on October 1, 2011, capping the interchange rate paid at 0.05% + 21 cents.
This renders many large institutions to only be able to profitably manage a
customer deposit account where monthly deposits exceed $1500 per month.

ChimpChange has a
regulatory advantage
when generating revenue
from interchange fees

As a result, many underbanked and low-income Americans are faced with

excessively high account maintenance fees to compensate the bank for providing
the transaction account product.
By contrast, ChimpChange is not faced with the same regulatory constraint, and can
therefore manage account values of almost any size in a profitable manner.

13

Digital Banking
Technology allows
ChimpChange to offer a
fee-free/low-fee platform
that retains rich
functionality

In response to the high-fee and functionally limited banking environment, a

number of digital banking solutions are emerging. Entities such as ChimpChange
offer low-cost and fee-free alternatives, allowing customers to complete their
banking needs on an easy and free to use mobile app.
Customers are increasingly demanding digital banking solutions, with pressure
placed on traditional high fixed-cost banking models. Former barriers to entry, such
as customer service, personal relationships and physical branch networks are
becoming less valued, with online-functionality taking their place.

Figure 15: Willingness to switch to a branchless bank

Figure 16: US Millennials Bank Branch Usage

Source: Prospectus; Accenture, The Digital Disruption in Banking

Source: BI Intelligence Digital Banking Survey Q3 2015

Figure 17: Percentage of US Customers using Mobile Banking and Mobile Payments

Mobile Payments

Despite many legacy costs

remaining, wider digital
adoption has begun

Mobile Banking

2011

2012

2013

2014

All Mobile Phones

39%
Smart Phones

52%
All Mobile Phones
22%
Smart Phones
28%
0%

10%

20%

30%

40%

50%

Source: Federal Reserve, Consumers and Mobile Financial Services 2015

14

Figure 18: Percentage of US Customers Accessing Banking Services via Various Methods
2011

2012

2013

2014

Bank Branch

Online and Mobile

banking is being rapidly
adopted across the US

87%

ATM

75%

Telephone Banking

33%

Online Banking

74%

Mobile Banking

35%
0%

20%

40%

60%

80%

Source: Federal Reserve, Consumers and Mobile Financial Services 2015

Ultimately, the Millennial and underbanked demographics want an effective,

affordable way to bank in the digital age. These customers are highly connected, are
willing to embrace digital disruption, and are receptive to financial innovation with
the entities they bank with.
Figure 19: Connected customers

Figure 20: embrace disruption

Figure 21: and adopt new products

Millennials:

Millennials:

Millennials:

Are highly connected, with

an 'always-on' mentality

Embrace new entrants

Expect their bank to be

proactive

94%

are active users of

online banking

72%

are active users of

mobile banking

92%

are active users of

social media

Source: Accenture, Digital Disruption in Banking

72%

would be likely to
bank with a nonfinancial services
companies with
which they do
business (compared
to 27% for those over
55)

Source: Accenture, Digital Disruption in Banking

58%

are interested in
their bank
proactively
recommending
products or services
(compared to 46%
for those over 55)

Source: Accenture, Digital Disruption in Banking

15

Key Comparables
Figure 22: Comparison of US Digital Banking Players
Company

GOBANK

MOVEN

SIMPLE

CHIMPCHANGE

Digital chequing account

Digital chequing account

Digital chequing account

Digital chequing account

USA only

USA only

USA only

USA only

MasterCard

MasterCard

Visa

MasterCard

$20

Instant to other GoBank

users, otherwise funds sent
to PayPal account

Instant to other Moven

users, 2-3 days other
recipients

Instant to other Simple

users, 2-3 days other
recipients

Instant to other
ChimpChange users, with
mobile phone numbers
instead of bank details

>42,000 free ATMs

>42,000 free ATMs

>55,000 free ATMs

>24,000 free ATMs

Savings account

No

No

Yes

Prospective Feature

Budgeting tool

No

Yes

Yes

Coming Soon

- Real-time Spending Meter

- Notifications for every
purchase
- Part of the "pay pass"
network

- Notifications for every

purchase
- Goals tool tracks safe to
spend balance

- Social media features such

as photo and video
functionality

- Direct deposits
- Cash deposits at any
Walmart

- Direct deposits

Yes

No

No

Yes

Deposit funds at 7-Eleven,

Rite-Aid, CVS, others, for a
fee up to $4.95

Deposit via MasterCard

rePower network,
Deposit cheques using Ingo
Money

Via money order at USPS,

local grocery/convenience
stores

Load Network: 7-Eleven,

CVS, K-Mart, Rite Aid,
Walgreens, Walmart

$8.95/mth, waived if at
least $500/mth direct
deposits are made

No

No

No

$2.50

No

No

$1.95

3% foreign transaction fee

1% interchange fee

1% foreign transaction fee

3% foreign transaction fee

No

No

No

No

Owned by Green Dot Bank

CBW Bank

Bancorp Bank,
acquired by BBVA

Central Bank of Kansas City

(CBKC)

Product
Key Markets
Debit Card
Minimum opening
balance
Minimum ongoing
balance
Transfers

ATM network

Other features

Deposit methods

Photo cheque
clearing
Other deposit
methods

Membership fees

Out-of-network
ATM fees
Foreign transaction
fees
Overdraft fees
Partner Bank

- Direct deposits
- Direct deposits
- Transfers w participating - Cash deposits across Load
financial institutions
Network

Source: Company Prospectus, Moelis Analysis

16

Listed Comparable Companies

Figure 23: Listed Comparative Metrics
Company

Ticker

Country

ASX Smallcap Industrials

AS40

Australia

ChimpChange

CCA

United States

Australian Tech

Market Cap

Price

P/E

P/B

FY17

FY18

2,645

15.4x

14.1x

Current
-

44

2.95

23.3x

A$m

A$

Afterpay Holdings Ltd

AFY

Australia

295

1.79

Oneview Healthcare

ONE

Ireland

226

4.38

20.3x

Touchcorp Ltd

TCH

Australia

191

1.61

11.8x

10.6x

4.3x

Mobile Embrace Ltd

MBE

Australia

142

0.32

12.8x

Zipmoney Ltd

ZML

Australia

138

0.67

51.2x

36.9x

108.3x

Updater

UPD

United States

128

0.30

8.2x

Bps Technology Ltd

BPS

Australia

54

0.92

0.1x

0.0x

1.6x

Average

18.9x

15.9x

24.8x

Median

12.3x

10.6x

7.2x

US Digital Banking Leaders

6.3x

US$m

US$

Capital One Financial Corp

COF

United States

34,746

67.85

8.4x

7.4x

0.7x

Discover Financial Services

DFS

United States

23,369

56.69

9.3x

8.6x

2.1x

Synchrony Financial

SYF

United States

23,283

27.92

9.3x

8.4x

1.8x

ALLY

United States

8,306

17.17

6.6x

6.0x

0.6x

CIT

United States

6,810

33.76

9.2x

8.7x

0.6x

Everbank Financial Corp

EVER

United States

1,960

15.65

10.2x

9.7x

1.0x

Bofi Holding Inc

BOFI

United States

1,165

18.48

8.5x

7.8x

2.2x

Flushing Financial Corp

FFIC

United States

614

21.21

13.3x

12.7x

1.3x

First Internet Bancorp

INBK

United States

136

24.63

8.3x

Ally Financial Inc

Cit Group Inc

US Banking

1.3x

Average

9.2x

8.7x

1.3x

Median

9.2x

8.5x

1.3x

US$m

US$

Wells Fargo & Co

WFC

United States

245,475

48.35

11.2x

10.5x

1.3x

JPMorgan Chase & Co

JPM

United States

231,101

63.20

10.1x

9.1x

0.9x

Bank Of America Corp

BAC

United States

139,082

13.54

8.8x

7.4x

0.5x

Citigroup Inc

United States

127,493

43.44

8.2x

7.2x

0.6x

HSBC

Britain

125,680

31.54

10.2x

9.2x

0.6x

RY

Canada

90,282

60.66

8.6x

8.2x

1.4x

USB

United States

70,213

40.67

11.7x

10.9x

1.5x

Goldman Sachs Group Inc

GS

United States

68,135

156.92

9.1x

8.1x

0.8x

Morgan Stanley

MS

United States

53,016

27.37

9.5x

8.3x

0.7x

Bank Of New York Mellon Corp

BK

United States

42,405

39.37

11.6x

10.3x

1.1x

Average

9.9x

8.9x

0.9x

Median

9.8x

8.7x

0.9x

HSBC Holdings
Royal Bank Of Canada
US Bancorp

US Payments Technology

US$m

US$

United States

184,783

77.48

23.9x

20.5x

6.2x

MA

United States

98,883

90.00

18.7x

14.2x

16.3x

American Express Co

AXP

United States

59,915

63.00

Paypal Holdings Inc

PYPL

United States

47,015

38.79

22.0x

18.9x

3.4x

Average

21.6x

17.8x

8.6x

Median

22.0x

18.9x

6.2x

Visa Inc
Mastercard Inc

Source: Bloomberg, Moelis Analysis

17

Competitive Framework
ChimpChange experiences moderate industry rivalry, with a low but increasing
number of pure-play digital banks. Traditional banks have historically
underserviced low-value accounts owing to limited profit opportunities; however
with the advent of FinTech app solutions, they are increasingly monetizing this
market segment. As technology enables start-ups and new platforms to scale
rapidly, barriers to entry are low, therefore the threat of new entrants is high.
Threat of substitutes remains an unknown, as the rapid pace of technological
change constantly alters the competitive landscape. Increased adoption of functions
like Apple Pay and Google Wallet may increase the attraction of services like
ChimpChange, as the ease of syncing debit cards and mobile apps attracts users.
Supplier inputs include sponsor bank and payment processing partners, both of
which have a number of alternative players who largely compete on a price basis.
Buyers (bank customers) typically display high switching costs from an effort and
logistical viewpoint, but bear very little financial costs in establishing a new bank
account. Accordingly, customers can typically demand higher savings rates, lower
lending rates, and better functionality.
Figure 24: Porters Five Forces Analysis

Supplier Bargaining Power

Many Sponsor Bank
alternatives are available,
putting downward pressure
on account keeping costs.
Payment processing partners
compete on a low-cost, high
volume basis.
Inputs

New Entrants
Traditional Banks increasing
awareness of the importance
of a digital offering.
Technological solutions that
are highly scalable allow
smaller entities to compete.
FinTech segment attracting
large capital investment.

Increased
Supply

Industry Rivalry
Traditional banks gradually
addressing the lower value
market segment with tech.
Currently low penetration of
digital banking across
addressable market.
Few pure-play mobile based
platforms currently.

Reduced
Demand

Threat of Substitutes
Uncertainty around potential
replacement of traditional
bank accounts.
Disruptive technologies
displacing demand for
platforms with apps & cards.

Sales

Buyer Bargaining Power

Financial products typically
sticky - high effort cost in
switching.
Actual barrier to switching is
low - no financial costs.
Savings & lending decisions
trigger investigation into
competing rates, fees and
offering.
Source: Moelis Analysis

18

Comparable Transactions
In the last 24 months, a number of companies similar to ChimpChange have been
the target of acquisitions and equity raising. Below, we look at the valuations
relative to each companys customer base, and examine the potential transaction
valuation of ChimpChange should it be acquired at similar customer multiples.
Figure 25: Comparable Transactions

Valuation

Status

Business Type

Simple

Acquired - BBVA

US Digital Bank

117.0

100,000

1,170

Moven

Venture Capital

US Digital Bank

90.0

100,000

900

Holvi

Acquired - BBVA

European Digital Bank

(unknown)

(unknown)

(unknown)

Atom

29.5% Acquired - BBVA UK Challenger Bank

198.0

(unknown)

(unknown)

Pockit

Venture Capital

UK Digital Bank

33.0

26,000

1,269

netSpend

Acquired - TSYS

Pre-paid Card Product

1,400.0

2,400,000

583

Mondo

Venture Capital

UK Digital Bank

31.7

50,000

634

Starling

Venture Capital

UK Challenger Bank

70.0

(unknown)

(unknown)

Tandem

Venture Capital

UK Challenger Bank

(unknown)

(unknown)

(unknown)

Number 26

Venture Capital

German Digital Bank

200.0

200,000

1,000

Monese

Venture Capital

UK Digital Bank

(unknown)

(unknown)

(unknown)

Average Valuation/Customer (US$)

926

(US$m)

Customers

Valuation/

Company

Customer (US$)

ChimpChange - Average Transaction Valuation/Customer applied

Now
Customers
Valuation (US$m)

Oct 2017 Est.

87,000

250,000

80.6

231.5

Source: Moelis Analysis

19

Financial and Operating Metrics

Projections & Assumptions
We examine ChimpChange under Base, Bull and Bear case scenarios, to observe the
operational sensitivity to key assumptions. Unless otherwise stated, all figures are
in USD, and per-customer figures are applied only to the active customer base.

Key Assumption:
CAC of $25/user

Customer Growth
Our base case assumes an average customer acquisition cost (CAC) of $25/user.
This is above ChimpChanges current CAC of $16.50, in line with the Prospectus
budgeted target of $25/user. Traditional marketing in the financial services
industry often runs at a $150 - $350 CAC. We assume organic growth to be ~3%
month-on-month for the first 24 months following IPO, equivalent to 1 in 5 active
users promoting the product via word-of-mouth and referral programs.
Figure 26: Customer Acquisition & Growth Assumptions

Bear
Average Customer Acquisition Cost ($)

$ 30.00

Base
$ 25.00

Bull
$ 20.00

Organic Customer Growth (% of Active)

15%

20%

30%

Organic Customer Growth

2.3%

3.0%

4.5%

Source: Moelis analysis

Break-even point is likely

to occur with 55,00060,000 active customers

Under our Base Case assumptions, total customers will approach 250,000 in October
2017, around the time of the ChimpChange forecasted cash-flow breakeven point.
If ChimpChange is able to maintain the low CAC theyve achieved since IPO and
obtain viral organic growth rates in its initial months (4.5%/month in our Bull
Case), the platform could rapidly approach the 1m customer mark within 2-3 years.
Figure 27: Total Customers (#) Estimates
1,250,000

BULL

BASE

BEAR

1,000,000
750,000
500,000
250,000

0
J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D
2016

2017

2018

Source: Moelis analysis

20

Deposit Base & Transaction Value

Our base case assumes a long term average monthly deposit of $750/customer. This
is well below the average transaction deposit account of $8,001 1, the average deposit
transaction of $1,0002, and the average Millennials monthly budget of $4,0073.
Key Assumption:
Average monthly deposits
of $750/user over the longterm

The existing average monthly deposit of $400 per active customer is likely to
increase as more active customers join off the back of the successful deposit-cashbonus marketing campaign. Since IPO, the vast majority of new users have joined
as a result of this campaign, whereby a customer is awarded $25 if they deposit at
least $500 per month for 3 consecutive months. Essentially, this encourages users to
set-up direct wage deposits into their ChimpChange accounts with their employer,
creating sticky, recurring income for CCA.
Figure 28: Monthly Deposit Assumptions

Bear
Average Monthly Deposit/Customer ($)

$ 500

Base
$ 750

Bull
$ 1,000

Source: Moelis analysis

As the average monthly account churn is consistently high (~70% of monthly

deposits are spent via debit card transactions, ~28% via ATM withdrawals),
deposits directly drive spending, and therefore, the monetisation value for
ChimpChange.
Figure 29: Monthly Deposits ($m) Estimates
350

BULL

BASE

BEAR

300
250

If direct-depositing of
wages gains traction, there
is considerable upside to
the average monthly
deposit assumption

200
150

100
50
J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2016

2017

2018

Source: Moelis analysis

The 2013 Federal Reserve Payments Study

The 2013 Federal Reserve Payments Study
3 Bank of America, Average Family Budget, United States Bureau of Labor Statistics
1
2

21

Additional Revenue Sources

Although the ChimpChange platform lends itself to numerous monetisation
opportunities, our assumptions only include potential revenue from Out-ofNetwork (OoN) ATM transactions and Mobile Cheque Processing. We ignore
revenue generated from inactivity fees, as these do not contribute to sustainable
core earnings.
Key Assumption:
OoN ATM use 1 per
month, per user

Currently, a typical ChimpChange user will make 2 ATM withdrawals per month,
50% of which are at OoN ATMs. Accordingly, we have assumed 1 OoN ATM
withdrawal per month (12 per year) under our base case scenario. Alternative
scenarios consider the balance between the trend of declining ATM usage (Bear
Case) with the nature of Millennial spending to be typified by more frequent, lowvalue cash purchases (Bull Case).

Key Assumption:
Cheques cashed per year
12/user

The average US citizen will cash 33 cheques per year, at an average value of $582
per cheque. We have assumed a very conservative 12 cheques per year and $150 per
cheque under our Base Case scenario. Though the number of cheques used per
annum is declining across the country, many individuals are still paid via cheque
and the volume of cheque usage is still immense, hence there is likely many years
left of monetisation opportunity.
Figure 30: ATM and Mobile Cheque Assumptions

Key Assumption:
Average Cheque Value
$150

Bear

Base

Bull

Out-of-Network ATM Use/Customer (#p.a.)

12

12

24

Cheques/Customer (#p.a.)

12

12

24

$ 75

$ 150

$ 300

Average Cheque Value ($)

Source: Moelis analysis

Figure 31: Other Revenue OoN ATM & Mobile Cheque Processing
BULL

BASE

BEAR

$3,000,000

$2,000,000

$1,000,000

$0

J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D
2016

2017

2018

Source: Moelis analysis

22

The following figure illustrates the growing contribution from monetisation sources
outside of primary interchange revenue, under our Base Case scenario. We see
considerable upside to our assumptions as the platform achieves scale and
additional features are added, representing high option value over potential future
revenue streams.
Figure 32: Revenue Stream Contributions over time Base Case estimates
Interchange Revenue

Additional revenues over

interchange fees could
materially add to the
profitability of the
company

OoN ATM Revenue

Mobile Cheque Revenue

$2,000,000

$1,500,000

$1,000,000

$500,000

$0
J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D
2016

2017

2018

Source: Moelis analysis

Cash Burn
Cash Burn rate is likely to
average ~$500k/month

Given the rapid growth profile of ChimpChange, investment into product

development and marketing will be maintained to quickly build the customer base.
For the next 12-24 months, we estimate cash burn to run at ~US$500k per month,
with target breakeven point in October 2017.
Figure 33: Estimated cash burn at different growth stages

Spend/Mth (US$'000)

The ChimpChange
platform is highly scalable.
Customer service is the
only aspect requiring
proportional growth;
typically 1 service agent
for every 1,500 active
customers

Spend Item

1. Beta

Customers

<80,000

Customer Service

2. Ramp-Up

3. Stabilising

80k - 1m

1m+

(50)

(75)

(250)

(100)

(150)

(75)

Partner Payments

(75)

(75)

(400)

Marketing
Cash Burn/month

(100)
(325)

(200)
(500)

(100)
(825)

500 250

1,000+

Product Development

Interchange Revenue/month

Past

Present

Future

Source: Moelis Analysis | Given the high customer growth rate, these are indicative ranges

23

Valuation & Investment View

Investment View
We initiate coverage of CCA with a BUY rating and a 12-month forward target
price of $1.20 per share, representing an estimated +73.9% total return over the next
12 months. Our share price target is derived via our base case DCF valuation;
grown by the cost of equity, less any dividends forecast to be paid in the next 12
months.
The DCF Valuation under our Base, Bull and Bear Case scenarios are illustrated in
the following section, and summarised below:

Base Case DCF Valuation (AUD):

Bull Case DCF Valuation (AUD):
Bear Case DCF Valuation (AUD):

$1.03 per share

$3.28 per share
$0.68 per share

We note that the range of potential future earnings of the company is wide, and
accordingly, valuation is highly sensitive to a range of assumptions. Continued
evidence of ChimpChanges ability to deliver on key operating metrics, grow the
customer base and achieve profitability will be primary catalysts to a realisation of
our valuation.

Discounted Cash Flow Valuation

Figure 34: DCF Inputs
DCF Inputs
Risk Free Rate

4.0%

% Debt Capital

Bond Premium

2.5%

% Equity Capital

Cost of Debt

6.5%

% Tax Rate

Equity Risk Premium

6.0%

WACC

16.0%

Beta

2.00

Perpetuity Growth

1.00%

Cost of Equity

16.0%

0%
100%
30%

Implied Terminal FCF Multiple

6.7x

Source: Moelis analysis | Implied Terminal FCF Multiple calculated for the Base Case

Base Case
Figure 35: DCF Valuation Base Case
DCF Valuation
Sum of FCF
- (Net Debt) / +Net Cash
- Minority Interests
Equity Valuation
No. Shares (Fully Diluted)
DCF Value/Share (USD)
USD/AUD
DCF Value/Share (AUD)

US$m
50.2
10.0
60.2
77.7
0.77
0.75
1.03

Source: Moelis analysis

24

Bull Case
Figure 36: DCF Valuation Bull Case
DCF Valuation
Sum of FCF
- (Net Debt) / +Net Cash
- Minority Interests
Equity Valuation
No. Shares (Fully Diluted)
DCF Value/Share (USD)
USD/AUD
DCF Value/Share (AUD)

US$m
181.5
10.0
191.5
77.7
2.46
0.75
3.28

Source: Moelis analysis

Bear Case
Figure 37: DCF Valuation Bear Case
DCF Valuation
Sum of FCF
- (Net Debt) / +Net Cash
- Minority Interests
Equity Valuation
No. Shares (Fully Diluted)
DCF Value/Share (USD)
USD/AUD
DCF Value/Share (AUD)

US$m
29.5
10.0
39.5
77.7
0.51
0.75
0.68

Source: Moelis analysis

25

Appendix I: Key Risks

Rate of Customer Adoption and use of the ChimpChange platform: The

Companys future revenue prospects are heavily impacted by the rate at
which customers join the platform and use the ChimpChange Debit Card.
CCA generate revenue predominantly via interchange fees, which is
directly linked to the amount of customer expenditure on ChimpChange
accounts.

Loss of Customers: Growth in the customer base is integral to achieving the

economies of scale required to reach profitability, with any loss of
customers countering this objective. Further, expenditure on marketing to
attract customers entails an upfront customer acquisition cost, thus
retaining customers for a period of time is required to pay back the initial
cost and then deliver profitability.
Partner Relationships and Contractual Risk: ChimpChange has formed
partnerships with a Sponsor Bank (CKBC) and Payments Processor
(TransCard), with whom contractual agreements have been made. If either
CKBC or TransCard were to terminate their contract with ChimpChange,
there may be adverse financial and operational impacts.
Reliance on Key Personnel: ChimpChanges management include
founding investors and operators These individuals have been significant
influencers on the business so far and will be core to the future success of
ChimpChange. The loss of key personnel may have an impact on both the

operational and financial performance of the company.

Research, Development and Intellectual Property Rights: The primary
asset of the company is the ChimpChange platform, which has been
developed both in house and with third-party software developers. There is
a risk that certain aspects of the IP developed may be claimed by others, or
CCA may incur costs defending claims.
Technological Development: Given the rapidly changing technological,
FinTech and Banking environments, there is a risk that new technology and
products arise that threaten the viability of the ChimpChange offering.
New Products/Services: New products intended to be introduced to the
ChimpChange platform may encounter development delays, or be
unsuccessful after launch, both of which may impact anticipated financial
returns.
Regulatory Risk: The regulatory responsibility presently rests with the
third parties providing banking infrastructure to ChimpChange, however
in the event of a change in laws or regulations, the Company may become
subject to additional requirements that could impact the business.
Security Breaches: A malicious attack on ChimpChanges systems could
expose customer and company data to theft or integrity violation. The
Company has existing policies in respect of security procedures, automated
and manual protections, encryption systems and staff screening to
minimise risk.

26

Appendix II: Board and Senior Management

Board of Directors
Figure 38: Board of Directors

Source: Prospectus

27

Senior Management
Figure 39: Senior Management

Source: Prospectus

28

Figure 40: Senior Management

Source: Prospectus

29

Appendix III: American Household Budgets Infographic

Figure 41: Bank of America Infographic America by the numbers

Source: www.bankofamerica.com/deposits/manage/average-family-budget.go

30

Financials

Chimpchange Ltd (CCA)

Profit and Loss (US$m)

Market Cap: $44m

Last Price: $0.690

2014a

2015a

2016e

2017e

2018e

0.0

0.0

0.1

2.1

9.4

Growth

- 1,578.6%

353.2%

EBITDA

(0.6)

(2.2)

(6.6)

(5.7)

1.1

Revenue

Growth
Dep'n & Amort
EBIT
Growth
Net Interest Expense
Profit Before Tax
Tax
Tax Rate (%)
Minorities
NPAT (Underlying)

260.4%

206.7%

(14.0%)

(120.1%)

0.0

0.0

0.2

0.3

(0.3)

(0.6)

(2.2)

(6.5)

(5.4)

0.8

Valuation Summary
Current Mkt Capitalisation

1.200

Total Estimated 12 Mth Return

73.9%

260.4%

198.5%

(16.0%)

(115.6%)

12 Mth Fwd Capital Return

73.9%

0.0

0.0

0.0

0.0

0.0

12 Mth Fwd Dividend Yield

0.0%

(0.6)

(2.2)

(6.5)

(5.4)

0.8

0.0

0.0

0.0

0.0

0.0

0.0%

0.0%

0.0%

0.0%

0.0%

0.0

0.0

0.0

0.0

0.0

Valuation Ratios
EPS (Underlying) ()
Growth

(2.2)

(6.5)

(5.4)

0.6

198.5%

(16.0%)

(110.9%)

0.0

0.0

0.0

0.0

0.0

Small Industrials (ex Fin's)

NPAT (Reported)

(0.6)

(2.2)

(6.5)

(5.4)

0.6

Premium / (Discount)

EPS (Underlying) ()

(0.8)

(2.8)

(8.3)

(7.0)

0.8

EV/EBITDA (x)

260.4%

198.5%

(16.0%)

(110.9%)

Balance Sheet (US$m)

0.690

12 Mth Target Price

260.4%

Growth

63.5

Last Price

One-Off Items

43.8

Shares on Issue

(0.6)

Growth

Buy

Target Price: $1.200

P/E (x)

2014a

2015a

2016e

2017e

(0.8)

(2.8)

(8.3)

(7.0)

2018e
0.8

260.4%

198.5%

(16.0%)

(110.9%)

nm

nm

nm

nm

68.7x

15.6x

16.6x

16.6x

14.9x

13.9x

nm

nm

nm

nm

395.4%
35.5x

nm

nm

nm

nm

17.6x

22.3x

10.6x

9.8x

8.9x

Premium / (Discount)

nm

nm

nm

nm

299.6%
0.0

Small Industrials (ex Fin's)

2014a

2015a

2016e

2017e

2018e

Cash

0.1

0.8

10.0

3.9

4.7

DPS ()

0.0

0.0

0.0

0.0

Inventory

0.0

0.0

0.0

0.0

0.0

Growth

Current Receivables

0.0

0.0

0.0

0.0

0.0

Yield (%)

0.0%

0.0%

0.0%

0.0%

0.0%

PPE

0.0

0.0

0.0

0.0

0.1

Payout Ratio (%)

0.0%

0.0%

0.0%

0.0%

0.0%

Intangibles

0.2

0.6

1.3

2.0

2.2

Franking (%)

0.0%

0.0%

0.0%

0.0%

0.0%

Other

0.0

0.0

0.0

0.0

0.0

Total Assets

0.3

1.4

11.3

6.0

6.9

NTA

Current Payables

0.0

0.0

0.0

0.1

0.5

NTA/Share (US$)

ST Debt

0.0

0.0

0.0

0.0

0.0

LT Debt

0.0

0.0

0.0

0.0

0.0

Performance Ratios

2014a

2015a

Provisions

0.0

0.0

0.1

0.1

0.1

ROA

(381.6%)

(247.8%)

Other

0.0

0.8

0.8

0.8

0.8

ROE

(395.4%)

(481.3%)

Total Liabilities

0.0

0.8

0.8

0.9

1.3

ROIC

Net Assets

0.3

0.6

10.5

5.0

5.6

Equity & Reserves

1.1

3.6

19.9

19.9

19.9

(0.8)

(3.0)

(9.5)

(14.9)

(14.3)

Shareholders' Equity

0.3

0.6

10.5

5.0

5.6

ND/(ND + Equity) (%)

Minorities

0.0

0.0

0.0

0.0

0.0

Interest Cover (x)

Total Equity

0.3

0.6

10.5

5.0

5.6

2014a

2015a

2016e

2017e

2018e
1.1

Retained Profits

EBITDA

2016e

2017e

2018e

(101.4%)

(62.8%)

9.2%

(116.7%)

(70.0%)

11.1%

(531.9%) (6,278.3% (3,974.9%

)
)

(672.7%)

56.3%

(0.8)

(10.0)

(3.9)

(4.7)

0.3x

1.5x

0.7x

(4.1x)

479.6% (2,073.2%
)
0.0x
0.0x

(345.7%)

(481.9%)

0.0x

0.0x

(34.5%)
0.0x
0.0

(0.8)

(0.8)

(0.9)

(1.3)

0.0%

0.0%

(648.8%)

(43.5%)

(13.5%)

Cash Flow Metrics

2014a

2015a

2016e

2017e

2018e

FCF/Share (US$)

(0.01)

(0.02)

(0.11)

(0.10)

0.01

nm

nm

nm

nm

44.0x

Working Capital/Sales (%)

(2.2)

(6.6)

(5.7)

0.0

0.0

0.0

0.0

Tax

0.0

0.0

0.0

0.0

(0.3)

in Working Capital

0.0

0.0

0.0

0.1

0.4

Price/FCPS (x)

0.0

1.0

0.0

0.0

0.0

Free Cash Flow Yield (%)

(2.3%)

(4.8%)

(21.4%)

(18.3%)

2.3%

(0.6)

(1.1)

(6.6)

(5.6)

1.3

Gross Cash Conversion

96.5%

50.9%

100.0%

98.2%

132.0%

90.2%

502.4%

(15.5%)

(122.5%)

Capex

0.0

0.0

0.0

0.0

0.0

Acquisitions

0.0

0.0

0.0

0.0

0.0

Divestments

3.5
0.04

0.1x

0.0

Growth

3.0
0.04

(0.1)

(0.6)

Operating Cash Flow

9.2
0.12

Net Debt/EBITDA (x)

Net Interest

Other

0.0
0.00

Net Debt (Cash) (US$m)

Working Capital
Cashflow (US$m)

0.1
0.00

Capex/Sales (%)
Capex/Depreciation (x)

0.0%

0.0%

0.5%

0.5%

0.5%

5,000.0x

7,500.0x

0.0x

0.0x

0.2x

2015a

0.0

0.0

0.0

0.0

0.0

Margins

2014a

Other

(0.2)

(0.5)

(0.5)

(0.5)

(0.5)

EBITDA

0.0%

Investing Cash Flow

EBIT

0.0%

NPAT

0.0%

2016e
0.0% (5,400.8%
)
0.0% (5,257.1%
)
(5,257.1%
0.0%

2017e

2018e

(276.7%)

12.3%

(263.2%)

9.0%

(263.2%)

6.3%

(0.2)

(0.5)

(0.5)

(0.5)

(0.5)

Equity Raised

0.7

2.3

16.4

0.0

0.0

Dividends Paid

0.0

0.0

0.0

0.0

0.0

Net Borrowings

0.0

0.0

0.0

0.0

0.0

Valuation Methodology

Other

0.0

0.0

0.0

0.0

0.0

WACC (%)

Financing Cash Flow

0.7

2.3

16.4

0.0

0.0

Discounted Cash Flow Valuation

FX / Non Cash Items

0.0

0.0

0.0

0.0

0.0

Sum-of-the-Parts Valuation

Change in Cash

0.0

0.7

9.3

(6.1)

0.8

Average Valuation

1.443

12 Mth Target Price

1.200

Free Cash Flow

(0.8)

(1.6)

(7.1)

Source: Company data, IRESS, Moelis & Company research estimates

(6.1)

16.0%
0.774
(1.360)

0.8
21-Jul-16

31

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DISCLOSURE APPENDIX
ANALYST CERTIFICATION
The Analyst, Benjamin Atkinson, responsible for the content of this research report, in whole or in part, certifies that with respect to the companies or
securities that the individual analyses, that (1) the views expressed in this report accurately reflect his or her personal views on the subject companies and
securities, and (2) no part of his or her compensation was, is, or will be directly or indirectly linked to the specific recommendations or views expressed in
this research report.

RATING DEFINITIONS
All companies under coverage are assigned a rating of Buy, Hold or Sell based on the expected 12 month total return estimated by the analyst(s). The total
return is a combination of the estimated capital gain or loss, in addition to the estimated 12 month forward dividends or distributions. In relation to all
companies that Moelis Australia Securities conducts research coverage on the relevant total return bands that derive the ratings are:
Buy: >15% Hold: 5% to 15% Sell: <5%.

RATINGS DISTRIBUTION TABLE

Distribution of Ratings as at 21 July 2016
SELL
0.0%

HOLD

BUY

61.1%

38.9%

Rating and Price Target History: Chimpchange Ltd (CCA) as of 20/07/2016

32

GENERAL TERMS OF USE FOR MOELIS RESEARCH REPORTS

Research reports have been prepared by Moelis Australia Securities Pty Ltd (Moelis Australia Securities), ACN 122 781 560, AFS Licence 308 241, a
Participant of the ASX Group and Chi-X and the intellectual property relating to the content vests with Moelis Australia Securities unless otherwise noted.

COMPANY SPECIFIC DISCLOSURES

Our related body corporate Moelis Australia Advisory Pty Ltd (ACN 142 008 446 AFSL 345499) ("Moelis Advisory") was appointed as Joint Underwriters
and Lead Managers for its IPO as announced to ASX on 30/06/2016 for which Moelis Advisory received compensation.

GENERAL DISCLAIMER AND DISCLOSURES

Disclaimer
The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore,
its accuracy is not guaranteed, and except to the extent that liability cannot be excluded, Moelis Australia Securities does not accept any liability for any
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This document is intended to provide general advice to wholesale investors only. No investment objectives, financial circumstances or needs of any
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Disclosure
Moelis Australia Holdings Pty Ltd, its officers, directors, employees, agents and authorized representatives may hold securities in any of the companies to
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General US Disclaimer
This research report has been prepared by Moelis Australia Securities which is a foreign broker that holds an Australian Financial Services License and has
a "chaperoning arrangement" with Weeden & Co. L.P. ("Weeden"), a broker-dealer registered with the U.S. Securities and Exchange Commission.
Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information
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Weeden accepts responsibility for the contents of this research report, to the extent that it is delivered to a U.S. person other than a major U.S. institutional
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The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory
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including restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

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