Kenanga Initiates Coverage on GHL Systems with 'Outperform"

KUALA LUMPUR: Kenanga Research has initiated coverage on GHL Systems Bhd with an "outperform" recommendation as the latter expands its service to cater for underserved markets.

The research house has a target price of RM2.30 on GHL, which represents 24.3% upside over its last traded price of RM1.85 on Wednesday.

In addition to having the bank as an acquirer to expand its presence and increase touchpoints 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.

"More importantly, playing the role of a third-party acquirer will allow GHL to have quicker roll-out of its EDC terminal/gateway, and earn recurring income from the MDR fee received," said Kenanga.

According to Kenanga, GHL is poised for exciting growth due to the urgent need for digital payment adoption among merchants that remain highly reliant on cash-based transactions.

As part of the Asean Payment Connectivity Initiative, Bank Negara has begun to implement cross-border digital payment with Thailand to allow Malaysia e-wallet users to sacane the Thai QR code and vice versa by 4Q 2021.

By 4Q 2022, cross-border digital transactions will also be made possible by referencing the recipient's mobile number.

Kenanga expects the initiative to result in a surge in digital payment volume when borders reopen with GHL well positioned to benefit from the more than 383,600 touchpoints across Asean.
It expects 4.3% revenue growth in FY21 to RM348.8mil with a 8.4% rise in net profit to RM33.5mil.

However, there will be further pick up in growth in FY22 with the end of the pandemic and the resumption of cross-border travel.

"We estimate the group’s total processed value (TPV) to grow 50% in FY22 which translates into revenue of RM475.3m (+36%) and net profit of RM47.5m (+42%)," it said.