Mobile banking firm Monitise Plc (LON:MONI) (OTCMKTS:MONIF) has a unique business model that sets it apart from its competitors in the mobile money sector. Equity research firm BTIG published a report on Monitise on Friday, June 6th. BTIG analyst Mark Palmer argues that there’s a very good chance that Monitise can reach its audacious goal of 200 million users worldwide by 2018. The company had 28 million subscribers at year-end 2013.

Monitise

Monitise: Unique business model

Palmer highlights that the company is ideally set up for rapid growth in almost all the major emerging markets. He points out that the firm’s mobile payment platform is designed to be easily integrated in existing banking systems, which allows national regulators to maintain more oversight and control over payment streams, and — most importantly — eases approval.

The BTIG reports goes on to argue that Monitise Plc (LON:MONI) (OTCMKTS:MONIF)’s regulator-friendly approach to penetrating emerging markets will give it a big leg up over competitors. Most competitor business models are designed as “disruptive” mobile banking technologies to circumvent existing  banking systems, which typically makes regulators unhappy. Furthermore, Monitise has already set up several joint ventures with local banks and other financial institutions, which has helped them “to get into the good graces of various emerging market regulators.”

Growth in key emerging markets

India — Monitise Plc (LON:MONI) (OTCMKTS:MONIF) partnered with Visa Inc (NYSE:V) back in 2010 to develop a technology platform for financial institutions and mobile network operators in India to provide services including banking, bill payments, bus and train tickets and mobile device refill. In February 2012, Movida, a mobile payments joint venture set up by MONI and Visa, signed an deal with major Indian bank HDF to introduce a new mobile payment service. The deal lets HDFC Bank’s customers pay bills, buy prepaid airtime or purchase a variety of tickets using their mobile phones.

Indonesia — The company entered the Indonesian market back in 2011 by creating a joint venture with local PT Astra Graphia Information Technology (AGIT), a well-known information and communication technology business with deep roots. The new venture was named PT AGIT Monitise Indonesia, and developed a platform able to support mobile banking for consumers, as well as payments and commerce for banks, mobile operators and retailers.

The enterprise is owned by Monitise Asia Pacific, a joint venture between Monitise Plc (LON:MONI) (OTCMKTS:MONIF) and Hong Kong-based First Eastern Mobile Investments.Shortly thereafter, PT AGIT Monitise Indonesia announced that Permata, one of Indonesia’s largest banks, has already signed a contract to be the launch partner for the new joint venture. Indonesia’s regulators, however, have been moving slowly, but a more widespread implementation of mobile payment systems is expected soon.

China — Monitise Plc (LON:MONI) (OTCMKTS:MONIF) has also been enjoying some success in China with a mobile device refill system. Furthermore, on December 3 of last year, Monitise  received regulatory approval from the Chinese government to launch its full-service mobile money platform in Hong Kong, the first step in growing its business throughout China.

Famous value investor Leon Cooperman is very bullish on the company. In his Q1 letter to investors, a copy of which was reviewed by ValueWalk, Cooperman stated:

Omega established a significant stake in London-based Monitise approximately one year ago and we continue  to find the investment compelling. The business continues to evolve such that an increasing portion of Monitise’s revenues  are recurring and high margin, and increasingly will be comprised of a share of the revenues that customers  generate from mobile commerce. The strategic importance of the company is highlighted by the fact that both  Visa Inc. and Visa Europe own significant stakes. Furthermore, we believe the fact that Peter Ayliffe recently  joined Monitise as Chairman of the Board after being President and Chief Executive Officer of Visa Europe for  over six years is a very strong signal.

In terms of valuation, Cooperman states:

On our numbers, Monitise should be very profitable and rapidly growing within our holding period.  Specifically, the company has guided to 30%+ EBITDA margins and 200mm+ users by June 2018. While those numbers provide a very attractive return profile from last sale, our numbers are higher than company  guidance and as such we have continued to accumulate shares.