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Can Supply@Me punch above its weight and become a global leader in inventory monetisation?


UK fintech start-up Supply@Me Capital (LSE:SYME) has bold plans for the future: it wants to be a global leader in the monetisation of working capital, establishing a new asset class. The question is whether such a small company can achieve such an ambitious goal?

Supply@Me provides a global inventory monetisation service to companies in – so far – 13 industrial sectors, including retail, beverages and tobacco. This platform essentially allows companies to make money out of their idle working capital.

Its client base is largely from the UK, which Supply@Me said it planned to make its hub, but it’s also extended into the Middle East and North Africa, where its Sharia compliant platform has been approved, and it said it was evaluating partnerships in the US.

Monetising inventory using this formula reduces risks associated with global supply chains, making this a much in demand solution. Supply@Me said in its latest outlook that increased pressure from governments on companies to limit global risks would also boost its coffers.

Will this month’s Supply@Me trading update ease concerns?

There are still some things that are up in the air with Supply@Me and a trading update, scheduled for later this month will be a crucial indication of how many issues the company has managed (or not) to resolve.

When we last wrote about the stock, we cheered the company’s decision to establish an agreement with a captive bank. This would effectively create a funding mechanism for Supply@Me without affecting its weak balance sheet, thereby scotching some investor concerns.

This isn’t there yet although last week founder Alessandro Zamboni said in an interview with Share Talk that he expected a “positive outcome in the coming months” and that the necessary checks – the file has to be authorised by the ECB – were “activated”.

For its global expansion, Supply@Me said in January that it wanted to establish a wholly owned subsidiary in the UAE and that it expected to achieve growth through this funding route and the captive bank. There are regions though where the situation is not so rosy.

Brexit could have a negative impact on results

In the January update, Supply@Me said Brexit may have a negative impact on results and that this “could” (note – not “would”) be offset by better economic circumstances in its other regions.

It also pointed out in the January update that the company is still at an “early stage” and gave the usual statement on the there being no guarantees for the future. These caveats are normal but worth noting when looking at the stock.

Zamboni said that demand “surpasses our expectations” in every region where the company is active, adding that the Middle East represents a “particularly strong growth area”. The unanswered question here is whether that surprise demand will show in its results.

Of additional concern in the absence of more information, Zamboni said that while the company had targeted clients with an inventory worth 150 million euros, it would now look at companies with 40 million to 50 million euros to be monetised to mitigate risk. What does this mean for the P&L? Let’s hope the trading update adds more on this.

Could Supply@Me be an acquisition target?

On social media share chat platforms there has been some buzz about Supply@Me being an acquisition target and suggestions that being bought by more “serious investors” would actually be the best way forward for such a teeny company with such lofty ideals.

Zamboni not only poured scorn on this in last week’s interview, saying there was “no intention” to sell Supply@Me, but added that the company would not rule out making acquisitions itself. Clearly he thinks that the company is in good shape to do this and that prospects are good.

He gave one more crumb to investors – that the positive impact of the company’s first securitisation programme would “start to become visible in our full year 2020 audited accounts”.

Shares in Supply@Me shot up last summer but are now trading at more modest levels after a suspension in January due to a data breach with its update. If there is reassuring news in this month’s trading update this could make Supply@Me a very interesting buying opportunity again.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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