Mastercard Incorporated Intrinsic Value – Mastercard JV Receives Green Light to Launch Domestic Payments Processing in China
November 21, 2023
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MASTERCARD INCORPORATED ($NYSE:MA) (NYSE:MA) is a worldwide technology company that focuses on providing innovative payment solutions and services. Recently, the company has made headlines as its joint venture (JV) with NetsUnion Clearing Corporation has received approval from the People’s Bank of China to commence domestic payments processing in the country. This green light from China will allow Mastercard to expand its presence in the world’s second-largest economy and become the first foreign payment processor to do so. This comes after years of negotiations with Chinese regulators regarding access to the domestic payments market. Financial services giants Visa and American Express have yet to gain approval to enter China.
The JV, known as NetsUnion Mastercard Technology Services, will provide services such as credit card processing, merchant acquiring, and account maintenance. This could help to create a level playing field for Chinese payment processors who have traditionally been dominated by domestic players such as UnionPay and Tencent’s WeChat Pay. Mastercard’s foray into China will give it a unique advantage over its competitors and could help accelerate its growth in the region.
Share Price
On Monday, MASTERCARD INCORPORATED stock opened at $400.7 and closed at $404.4, up by 1.0% from last closing price of 400.3. This jump in stock price can be attributed to the news that the joint venture between Mastercard and NetsUnion Clearing Corporation has been granted approval by China’s State Administration of Foreign Exchange (SAFE) to launch domestic payments processing services in China. The venture will provide a range of payment services including card acceptance, account transfer, digital wallet, and merchant acquiring services. It is a major development for Mastercard as the venture marks the first foreign payment services provider to receive a license to operate in China’s domestic payments market.
This will open up opportunities for Mastercard to expand its business in the world’s most populous country, which is currently the second largest payment market in the world. The venture will also create more convenient payment options for Chinese customers and merchants and further enhance the appeal of Mastercard’s products and services in the region. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Mastercard Incorporated. More…
| Total Revenues | Net Income | Net Margin |
| 24.37k | 10.93k | 45.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Mastercard Incorporated. More…
| Operations | Investing | Financing |
| 10.95k | -1.49k | -10.75k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Mastercard Incorporated. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 39.67k | 33.29k | 6.7 |
Key Ratios Snapshot
Some of the financial key ratios for Mastercard Incorporated are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 16.0% | 18.6% | 57.3% |
| FCF Margin | ROE | ROA |
| 40.2% | 147.7% | 22.0% |
Analysis – Mastercard Incorporated Intrinsic Value
At GoodWhale, we conducted an in-depth analysis of MASTERCARD INCORPORATED‘s financials and found that the fair value of its share is around $451.8. We determined this value using our proprietary Valuation Line. Currently, MASTERCARD INCORPORATED stock is traded at $404.4, presenting investors with an opportunity to purchase the stock at a fair price that is undervalued by 10.5%. More…
Peers
Its competitors are Visa Inc, American Express Co, and Sezzle Inc. Mastercard Inc has a market capitalization of $321.4 billion as of May 2020, while Visa Inc has a market capitalization of $514.4 billion, American Express Co has a market capitalization of $108.4 billion, and Sezzle Inc has a market capitalization of $1.4 billion.
– Visa Inc ($NYSE:V)
Visa Inc is a payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners, and government entities to fast, secure, and reliable electronic payments.
Visa’s market cap is $428.33B as of 2022 and its ROE is 32.85%. The company operates in approximately 200 countries and has over 3.5B Visa-branded cards in circulation.
– American Express Co ($NYSE:AXP)
American Express Company is a diversified financial services company. It is engaged in a range of businesses, including charge and credit card issuing, merchant acquiring, travel-related services, and other financial services. The company’s principal products and services are charge and credit card products and services, travel-related services, and other financial services. The company has a market cap of 109.75B as of 2022 and a return on equity of 26.55%.
– Sezzle Inc ($ASX:SZL)
Sezzle Inc is a financial technology company that offers a buy now, pay later solution for online and in-store shoppers. The company has a market cap of 114.35M as of 2022 and a return on equity of -269.5%. Sezzle Inc’s main competitors are Afterpay Ltd and Zip Co Ltd.
Summary
Mastercard Incorporated has received approval from China’s central bank to begin domestic payments processing in the country. This action marks a major milestone for the company, as it extends its international presence and further solidifies its role as a leader in global payments. The move further increases Mastercard’s exposure to the world’s second-biggest economy, offering access to a wide range of consumers and businesses. This could potentially pave the way for Mastercard to benefit from e-commerce growth, given that digital payments are accelerating across China.
As a result, investors may view the move as a positive sign for the company’s stock, as the country is now the largest market for the payments giant. With a bigger presence in China, analysts expect Mastercard’s revenue to grow significantly in the coming years.
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