• GHL is adopting INSTANT services in 3 public wet markets in Penang via the ‘Cashless Pasar Awam’ campaign under BNM and the Penang State Government. Currently, over 60 merchants have signed up with GHL’s INSTANT.
• We are positive on the announcement as this would promote expansion of GHL’s footprint locally and encourage cashless payment adoption among SMEs and entrepreneurs.
• We believe GHL’s ability to accept payment from local and cross border e-wallets provide competitive edge over other players.
• Maintain BUY at a DCF-derived TP of RM2.15 TP. We continue to like GHL given its attractive long-term growth potential of TPA business.

INSTANT is on board in Penang

GHL is adopting its new service named INSTANT – the All-in-One cashless payment which involves on-boarding process that takes less than 2 hours at 3 public wet markets in Penang via the ‘Cashless Pasar Awam’ campaign. The campaign is one of initiatives taken by BNM and the Penang State Government to encourage cashless payment there. Throughout INSTANT, merchants will be able to accept debit/credit cards and e-wallet (both local and cross border) as well as e-pay services (mobile reload and bill payment) with a single terminal device (android-terminal). The ‘Cashless Pasar Awam’ initiatives target at least 3,750 merchants from 56 public wet markets in Penang to adopt cashless payment.

Competitive edge over other players

We are positive on the announcement as this would promote expansion of GHL’s footprint locally (currently GHL has over 244,000 payment touchpoints in Malaysia) and encourage cashless payment adoption among small and medium enterprises (SMEs) as well as entrepreneurs. Despite intense competition expected from other payment providers and banks to acquire merchants under this campaign, we believe GHL’s ability to accept payment from local (Boost, Touch and Go, GrabPay, MCash and etc.) and cross border (Alipay and WeChat Pay) e-wallets would provide competitive edge over other players. Currently, over 60 merchants have signed up with GHL’s INSTANT.

Maintain BUY with TP of RM2.15

Maintain BUY with a DCF-derived TP of RM2.15 (WACC: 9%, terminal growth rate: 3%), implying 2020/2021F PE of 40x/32x. We continue to like GHL given its attractive long-term growth potential of its transaction payment acquisition (TPA) business underpinned by surge in demand for digital payments due to convenience and safer medium of payments.

Source: BIMB Securities Research - 21 Jul 2020