AirAsia Group’s (AAGB) e-wallet unit BigPay has secured up to USD100m in financing to further expand its product offering and grow the model in new markets. We are mildly positive on this given the potential scaling up of this operations and product development acceleration that the funding will help with. BigPay’s aim of establishing itself as a challenger bank in the ASEAN region is achievable, though likely to entail further rounds of funding. While we like this aspect of the Group’s business, the Covid-19 pandemic continues to weigh heavily on its overall operations. We maintain our Underperform call on AAGB with an unchanged target price of RM0.19.

• Funding led by SK Group. AAGB’s e-wallet unit BigPay wrapped up USD100m in this round of funding, led by South Korean conglomerate SK Group. With the funds, the company intends to expand its product offerings by launching digital personal loans, transactional lending, offering for micro SMEs and to grow the model in new markets such as Thailand and the wider ASEAN region.
  
  BigPay is currently present in both Malaysia and Singapore. Its current offering includes a prepaid debit card which can be used to spend anywhere Visa or Mastercard is accepted, local and international money transfers, micro-insurance, bill payments and a budgeting tool.
  
  BigPay has also recently applied for Malaysia’s digital banking license alongside 28 other contenders. Up to five licenses may be issued by Bank Negara Malaysia, with the winners to be announced in 1Q22. The SK Group’s know-how in fin-tech would be able to speed up the transformation of BigPay from an e-wallet into a full-fledged digital bank.

Source: PublicInvest Research - 9 Aug 2021