RIWI Corp. (RIW.CN)

Website
Yahoo Finance
Filing

June. 30, 2020
2020 Q1 Data
Price: $2.6 Shares:18m, Cap: $47m
1.Business
(1) History 
The company was founded by Neil Seeman in 2009 at a University of Toronto dormitory when he is researching a new way for an unbiased survey method over the internet. He found a way to use misspelled domain names to capture the unexpected internet user to engage in a non-incentivized survey.  He applied and awarded a US patent for it. The company started to commercialize the product it is has been quite successful. It was able to grow revenue from 0.8m in 2015 to over 3m in 2019. 

(2) Major business
It is major business is still the survey part which includes short-form survey and message testing, although it started to sell the old data it had collected through the years. 

There are three segments it generates revenue from: The US government for security. NGO's of G7 organizations, big fortune 500 companies. I think most of its revenue is from the first to segments while it truly likes to generate more from the third one. 

Its major strength is the survey in China and other similar areas in which its competitors are not good at surveying. Also, its method seems pretty accurate. 

The business has a super high margin and pretty low fixed expense expect the payroll. It is highly scalable which can support higher revenue without incurring the same amount of expenses. It became more profitable when revenue grows higher. 

(3) Debt
no

(4) Industry
There are many bigger companies in this industry. Its main competitors are those survey websites. However, those websites generally use incentivized registered users which is very different than RIW's model. 


2. Management
(1) Key person
Neil Seeman is the founder and CEO of the company since the beginning. He is super focused on revenue growth and profitability. 

(2) Insider ownership & Compensation
Neil Seeman and his brother control 5.7m shares through their family trust. He also owns 430k shares by himself. 

BP Capital: Controlled by Robert Pirooz, One of the directors and early investors, owns 2.4m. Since Nov 2019, BP Capital started to unload its RIW shares. Shares decreased from 2,775,400 shares to 2,436,150 shares by June 29, 2020.  Price range from $2.15 to $4.61. 

3. Financial data


4. Valuation and comments
(1) Currently, the company is traded over 10 times of revenue and 30 times of earning which is quite expensive. However, there is a high expectation that the company can grow both its revenue and income quite a bit. 

(2) The company is targeting to achieve 30m in revenue by 2024 which implies a 60% annual growth rate. I cut it into 20m which implies a little below 50% growth rate. It is very hard to guess how much income it can generate by then. But I put a 50% net income ratio if it can achieve the higher revenue. Using a 20 p/e ratio, it can support a market cap of US$200m by then. 

(3) There is a very detailed analysis by the following investor wrote in 2019 when it was just in $1.50. 
http://veritasvatillum.com/2019/02/19/riwi-corp/


5. Risk
(1) There is not much assurance that it can achieve high revenue growth despite it had done it in the past. Since it is still contract based, it is very hard to predict what will happen. 

(3) The insiders seem not really interested in keeping the shares. Lately, there is quite a bit of insider selling in the open market which I would argue is the main reason cause the price down from $5 to below $3. 

6. Conclusion
The company is a very ideal investment except the price is a little high. 


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