• GHL has enabled GrabPay acceptance in the Philippines where it will focus at high volume transactions business with high visibility locations.

• We view this positively as it would provide further structural growth for GHL’s transaction payment acquisition (TPA) business in the Philippines.

• BUY with an RM1.80 DCF-derived TP implying 45x 2019F PE and 37x 2020F. We like GHL for the long term growth prospect of its TPA business.

GrabPay is enabled in the Philippines

GHL System Philippines (GHL PH) enabled GrabPay payments’ acceptance focusing on high volume transactions business (convenience stores, petrol stations, grocery chains and food & beverage outlets) at high traffic locations (central business district, international airports and major cities). The payment transactions include both: Static QR cards (consumers scan the merchants) and GrabPay QR on smartphones (Merchants scan consumers'). As at Jun 2019, GHL acceptance points in the Philippines stands at 86,000.

Solid prospects in Philippines

We are positive on the news as this would provide additional growth to GHL’s TPA business in the Philippines via the e-wallet segment. By 2018, the Philippines’ TPA business has grown at a 3-year CAGR of 31% to RM10.6m. We believe e-wallet trend is gaining attraction in the Philippines given its high internet and smartphone penetration rate at 63% and huge unbanked population. The World Bank noted that 65% of adult Filipinos do not have bank account as at May 2018.

Maintain BUY with TP of RM1.80

Reiterate BUY with a DCF-derived TP of RM1.80 (WACC: 8%, terminal growth rate: 3%), implying 2019/2020F PE of 45x/37x, before easing to 29x in 2021F. We continue to like GHL as its ongoing regional TPA business expansion provides good long term growth potential.

Source: BIMB Securities Research - 6 Nov 2019