Technical Analysis

Revenue Group has just broken away from the 20-day Bollinger band, and this indicates increased volatility, attracting higher trading volume. With the momentum indicator RSI pointing upwards 60%, this can propel the stock to a higher target price of RM1.42 and RM1.55. Furthermore it has leapt above the 2-month resistance level of RM1.28. On the downside, support level is anticipated at RM1.20 and RM1.12.

Trading Call: Buy on a breakout above RM1.28

Target 1: RM1.42

Target 2: RM1.55

Exit 1: RM1.20

Exit 2: RM1.12

Commentary

Revenue Group provides cashless payment solutions. It recently launched an all-in-one digital payment terminal, also known as the Electronic Data Capture (EDC). This EDC machine can accept both traditional credit cards and e-money, in just one single terminal. To date, it has partnered with the majority of e-wallet providers, including notable ones like Alipay, Boost, Touch ’n Go and WeChat Pay. In terms of business model, Revenue Group charges a rental fee and maintenance fee for every EDC terminal that is rented out, together with an electronic transaction processing (ETP) fee for every e-wallet payment received by the merchants. As at FYE2018, it has deployed a total of 19,200 EDC terminals. Revenue Group’s latest annual report showed that it has chalked up a total transaction value of RM1.12bil for ETP, which translates to a revenue of RM12.3mil. According to BNM’s payment statistics, the 2018 e-money category alone has chalked up 2 billion transactions worth RM11bil. As more EDC terminals are deployed, it will definitely improve Revenue Group’s bottom line.

- Targets to deploy 40,000 EDC terminals in FYE2019 from 19,200 in FYE2018

- Maintains market leadership by partnering with Public Bank, Hong Leong Bank to deploy more EDC terminals

- Recurring income stream from ETP fees

- Aggressive marketing spending by e-wallet providers to expand user base and spur transaction growth.

Source: AmInvest Research - 17 Apr 2019