• GHL has enabled WeChat Pay acceptance in Malaysia and Cambodia. For Malaysia, it includes Ringgit-based WeChat Pay for Malaysian users.

• We view this positively as WeChat Pay's strong presence in ewallet should provide additional growth to the transaction processing value (TPV) under TPA business.

• Maintain BUY with an RM1.80 DCF-derived TP implying 45x 2019F PE and 37x 2020F. We believe this strengthens the longterm growth potential of its TPA business further.

WeChat Pay acceptance in Malaysia and Cambodia

On 30 Oct 2019, GHL announced that it has enabled WeChat Pay’s ewallet acceptance at its selected payment touch points across Malaysia and Cambodia. In addition to acceptance of Renminbi based WeChat Pay (for Chinese user), GHL will also enable the acceptance of: (1) Ringgit based WeChat Pay MY for Malaysian users and (2) Renminbi WeChat Pay payment option for internet transactions in Cambodia.

Bright outlook for GHL’s e-wallet

We are positive on the news as this would support the growth for GHL’s e-wallet segment under the transaction payment acquisition (TPA) business. This also provides additional payment option for Chinese tourist besides Alipay as both platforms account over 90% penetration rate in China. WeChat (international user) and Weixin (Chinese user) has a combination of 1bn active user account as at 2Q19. We also note that since GHL enabled Alipay in 2016 for Chinese tourist visiting Malaysia, transaction processing value (TPV) from Alipay surged to RM500m by 2018. With WeChat Pay on board and the target to welcome 3.5 million Chinese tourists during Visit Malaysia 2020, the growth outlook for the TPA segment looks promising.

Maintain BUY with TP of RM1.80

Reiterate BUY with a DCF-derived TP of RM1.80 (WACC: 8%, terminal growth rate: 3%). Our TP implying 2019/2020F PE of 45x/37x, before easing to 29x in 2021F. We believe this is fair owing to strong growth potential of the TPA business on the back of ongoing support from governments across region for cashless payment

Source: BIMB Securities Research - 31 Oct 2019