The research house said the partnership will likely be successful in its bid as Celcom already serves the underbanked while RHB will benefit the consortium with its expertise and guidance, and Axiata already has the framework to operate a digital bank.
In terms of profitability, Kenanga believes the group will focus on user and revenue growth in the initial years, resulting in the first profit contribution starting at the earliest in FY23.
On an assumption that Boost disbursed micro-loans of RM1,000 to a third of its nine million active users, it would achieve a maximum permissable total asset size of RM3bil during the foundational phase of three to five years.
Based on a hypothetical effective annual interest of 3%, this will yield Boost interest income of RM90mil a compared to FY21 revenue fo RM25bil.
"We foresee that Boost will provide complementary financing facilities alongside its e-wallet services.
"As an e-wallet, Boost has valuable information on customers’ and merchants’ cash flows and behavior, allowing them to provide risk-based pricing and product personalization," said Kenanga.
It added that Axiata will likely cross-sell its products and provide incentives to boost customer acquisition and retention given its myriad of services.
The research house maintained "outperform" on Axiata with a target price of RM4.20.