Stablecoin Adoption And AI Payments Will Reshape Global Transaction Flows Over Time

Catalysts

About OSL Group

OSL Group operates a global stablecoin payment and trading platform that connects fiat currencies with digital assets for institutions and enterprises.

What are the underlying business or industry changes driving this perspective?

• Expansion of stablecoin usage in global payments, with stablecoins already about 60% of OSL’s transaction volume, positions the company to capture more cross-border flows and payment-related fees, which directly links to revenue.
• Growing use of AI agents and machine-to-machine payments, where OSL has built 24/7 instant settlement and agent ready rails, could support higher transaction frequency and throughput, which is relevant for both revenue and operating leverage.
• Large and diversified regulatory footprint, with over 50 licenses and registrations across 11 jurisdictions covering markets that represent most of global GDP and trade, can support broader client onboarding and institutional volumes, which matters for revenue scale and earnings potential.
• Vertical integration across BizPay, Banxa, StableHub and USDGO, covering issuance, conversion, on/off ramps and cross-border settlement, gives OSL multiple fee points along the same transaction flows, which can influence both revenue density and net margins.
• Recent equity financing of US$500 million and active M&A focus in payments and on/off ramps provide capital and assets to widen connectivity into regions like Europe and selected emerging markets, which can increase addressable volume and improve earnings sustainability.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming OSL Group's revenue will grow by 46.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -79.1% today to 8.9% in 3 years time.
• Analysts expect earnings to reach HK$136.0 million (and earnings per share of HK$0.17) by about June 2029, up from -HK$386.8 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 168.5x on those 2029 earnings, up from -26.6x today. This future PE is greater than the current PE for the HK Capital Markets industry at 13.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.69%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• OSL is heavily tied to long term growth of stablecoins and the AI agent economy. If adoption of stablecoin payments or agent based transactions slows or stalls relative to current projections, transaction volumes on OSL’s rails could be lower than expected, which would affect revenue and earnings.
• The group is investing heavily in global expansion, technology, staff and M&A while still reporting an adjusted operating loss of below HK$300 million. If cost growth does not moderate or efficiency gains take longer to emerge, net margins and earnings could remain weak for longer than investors expect.
• OSL’s model depends on a large and growing set of licenses across 11 jurisdictions. Any tightening of digital asset or stablecoin regulation, delays in new regimes like Hong Kong’s stablecoin framework, or adverse local rule changes could restrict activity in key markets, which would affect revenue and could pressure margins through higher compliance costs.
• The plan to pursue further acquisitions in payments, on and off ramps and emerging markets means OSL carries execution risk from integrating new businesses, licenses and teams. If acquired assets underperform or prove harder to integrate, this could dilute returns from the HK$500 million equity financing and weigh on earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of HK$18.86 for OSL Group based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be HK$1.5 billion, earnings will come to HK$136.0 million, and it would be trading on a PE ratio of 168.5x, assuming you use a discount rate of 7.7%.
• Given the current share price of HK$11.4, the analyst price target of HK$18.86 is 39.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.