PETALING JAYA: Revenue Group Bhd’s (RGB) is expected to record a higher level of sales in its financial year 2022 (FY’22) ending June 30, even as its recent fourth quarter earnings came within a research house’s expectations.
The higher level of sales is anticipated to be driven by financial institutions when they replace the older models of the electronic data capture (EDC) terminals while the merchants may demand more of such terminals, said UOB Kay Hian Research (UOBKH).
It noted that the the company’s full-year net profit had accounted for 95% of its forecasts.
“Despite the challenges from the lockdowns in the country, its FY’21 net profit is at a record high since its listing with strong contribution from its EDC terminal and electronic transaction processing (ETP) segment where both segments’ revenue increased by 18% year-on-year (y-o-y) and 10% y-o-y respectively,” UOBKH said.
The research house said that revenue from the ETP segment had continued to increase by 5% quarter-on-quarter and more than 100% y-o-y in the recent fourth quarter.
“The segment remains resilient with the wider adoption of digital payments where both customers and consumers shifted into electronic payment for convenience and safety.
“We expect this segment to continue to grow in FY22,” it said.
The coming financial year could also see a higher number of the company’s EDC terminals in the market and resilient contribution from online transactions such as Taobao and Lazada, it said.
UOBKH said RGB is currently working with their partner banks on the development, testing and certification of the new digital payment terminals, which is expected to be rolled out and deployed to the market soon.
“Besides that, RGB is also working closely with different e-wallet issuers to bring the payment acceptance into digital payment terminals.
“Due to the Covid-19 pandemic, its initial plan of expanding into Myanmar and Cambodia markets have been put on hold,” UOBKH said.
The research house maintained its buy rating on the stock with a target price of RM2.20, which is a 57 times the FY’22 forecast price to earnings ratio.
“We like RGB for its higher margins as compared with peers. RGB is also expected to meet the requirements to transfer its listing to the Main Board by the end of 2021 or 2022,” it said.