Mobile payment solutions identified as growth engine
Communication and technology services company Green Packet Bhd is eyeing an expansion into a new growth area - the mobile payment solutions segment, an area poised for disruptions through technology.
Over the past few years, Malaysians are increasingly embracing e-payments, notably following the greater adoption of smartphones and the introduction of more mobile-based payment platforms.
According to the 2016 Visa Consumer Payment Attitudes survey, 74% of Malaysians prefer to make electronic payments instead of cash, an increase of 8% compared with 2015. In fact, Visa indicated in a separate study that seven in ten Malaysians are willing to use mobile wallets.
Green Packet, which returned to the black in 2016 after financially bleeding since 2008, has jumped onto the promising mobile payments bandwagon by acquiring payment solutions providers since late last year.
To date, it has invested up to RM13mil in its pursuit to penetrate into this segment
Moving forward, in the next three years, Green Packet aims to record 10% of top line contribution from this business.
The company made its maiden foray into the mobile payment solutions segment earlier this year, after it completed the acquisition of an 80% stake in e-payment firm WebOnline Dot Com Sdn Bhd for RM9mil, via its wholly-owned subsidiary Packet Interactive Sdn Bhd.
WebOnline operates a payment gateway and e-wallet service under the brand Webcash.
Subsequently, Green Packet piloted its very own Kiple application that functions as an e-wallet for offline payments powered by Webonline.
Two week ago, Green Packet added another firm to its portfolio, following the takeover of mobile application developer Mobiduu Solutions Sdn Bhd for RM4mil. The latest acquisition enables Green Packet to provide an end to end solution for its services, as Mobiduu has developed a proven and ready m-commerce and loyalty platform.
The company’s new investment strategy seems to bode well for the investors, as Green Packet’s share price has risen significantly by 28.57% to 36 sen year-to-date.
In a reply to StarBizWeek, Green Packet chief executive officer Kay Tan says it is high time for the group to tap into the booming demand for e-payment services.
“We started looking at the mobile payment solutions space since the fourth quarter of 2016. With Webcash, Kiple and Mobiduu, we are integrating the various solutions into one integrated technology platform to offer a complete solution with the mobile first front-end, e-wallet and a payment gateway back-end.
“This gives the end user a complete experience and our potential business partners an integrated and simple go to market proposition,” says Tan.
The Main Market-listed communications and technology services company has a market capitalisation of approximately RM274.1mil, with a price-earnings ratio of 5.32 times.
Currently, the single largest shareholder in Green Packet remains the company’s founder Puan Chan Cheong, better known as CC Puan, who has a 30% stake.
Green Packet streamlined its loss-making business strategy back in 2014, after it partially disposed its stake in the cash-burning wireless mobile operator Packet One Networks (M) Sdn Bhd (now known as webe) to Telekom Malaysia Bhd .
At about the same time, Green Packet refocused its efforts on beefing up its operations. Following the internal reorganisation, the company’s core competencies centre around four key pillars namely solutions, communications, Internet of Things (IoT) and e-services platform.
Its new mobile payment solutions business falls under the key focus area of e-services. Green Packet’s involvement in the mobile payment solutions market is still rather preliminary, as the company is currently undertaking trials or pilot stage of the mobile payment solutions.
While the current revenue contribution from the segment is immaterial to the company’s overall top line, Green Packet aims to build the segment into a significant revenue contributor moving forward.
“Over the next three years, we target contribution from the mobile payment solutions to be around 10% of both the group’s revenue and earnings,” Tan points out.
In the RHB Top Malaysia Small Cap Companies 25 Jewels 2017 book, Green Packet is selected as one of the top 25 listed entities with good growth potential.
“Green Packet has put in place a payment platform to provide end-to-end solutions for its digital ambitions. We expect the profitable core segments of communications and solutions to drive a steady stream of recurring earnings moving forward, with the new digital investments fuelling a stronger earnings recovery from financial year 2018,” says RHB Research.
Moving forward, Tan envisages both of its core segments of communications and solutions to continue being the key drivers of the company’s operating and financial performance. “The revenue contribution by the communications and solutions segments are split at around 60:40 ratio respectively from our total yearly revenue of RM350mil – RM400mil with modest growth. This will continue on a yearly blended basis with certain spikes in months where we have greater sales for solutions projects.
“In addition, we also see increased traction for both businesses from markets in the Middle East for the second half of this year,” he says.
On the other hand, its IoT business, via a 22% equity interest in Atilze Digital Sdn Bhd, is expected to contribute positively next year. Similar to the e-services segment, Green Packet’s participation in the IoT business is still preliminary. Atilze is an integrated IoT services and solutions provider bringing to life IoT solutions such as the LoRa Platform, smart city ecosystem and the Atilze Connected Vehicle Platform.