GHL Systems set to ride Asean digital payment boom


A GHL product

PETALING JAYA: With the Asean Payment Connectivity initiative in place, GHL Systems Bhd stands to benefit greatly when the borders reopen, as it has more than 383, 600 touch points across Asean in place to facilitate cross-border transactions.

Kenanga Research noted that Bank Negara has started to implement cross-border digital payment with Thailand, which allows Malaysian e-wallet users to scan Thai QR code and vice-versa (going live by the fourth quarter of 2021), and also cross-border digital transaction by referencing the recipient’s mobile number (going live by the fourth quarter of 2022).

This initiative will lead to a surge in digital payment volume when borders reopen, said the research unit.

It added that GHL as a payment processor (pic below) is poised for exciting growth due the urgent need for digital payment adoption among merchants, which are still highly reliant on cash-based transactions.

In addition to having the bank as an acquirer to expand its presence and increase touch points across Asean, GHL has also taken on the role as a third-party acquirer to cater for the underserved small to micro companies that are often rejected due to overly stringent bank requirements.

“By focusing on this two-pronged approach, GHL is able to expand its addressable market and hence expand its revenue base, ” said Kenanga Research.

More importantly, playing the role of a third-party acquirer will allow GHL to have quicker rollout of its electronic data capture (EDC) terminal or gateway, and earn recurring income from the merchant discount rates (MDR) fee received.

The research unit expects GHL’s net profit will rise 8.4% to RM33.5mil on the back of 4.3% increase to RM348.8mil in revenue for the financial year ending Dec 31, 2021 (FY21).

“We believe that FY22 will be more reflective of GHL’s growth potential with the expectation of the pandemic coming to an end and the gradual resumption of cross-border travel.

“We estimate the group’s total processed value (TPV) to grow 50% in FY22, which translates into revenue of RM475.3mil (36% higher) and net profit of RM47.5mil (42% higher), ” said the research unit.

Growth risks include slower TPV growth, reluctance of merchants in adopting cashless transactions, downward pressure on MDR and competition from non-listed peers and overseas peers.

Kenanga Research initiated its coverage on GHL with an “outperform” call and a target price of RM2.30, based on FY22 estimated price-to-earnings ratio of 55 times.

This is given GHL’s solid track record in the industry and being the only player with a strong Asean presence to ride the digital payment boom.

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