• Maintain TRADING BUY (TP: RM0.79). GHL Systems Berhad (GHLSYS) recorded a notable +12.2% YoY increase in FY23’s revenue, predominantly attributed to the strong performance of its TPA business segment, thanks to the resilient domestic consumption and increased spending from inbound tourism activities. TPA segment marked a +15% YoY expansion, supported by a 14% increase in its terminal growth, resulting in higher total TPV processed (+21.1% YoY). The group however reported a slightly lower core net profit of RM28.4mn for FY23, making up 105% and 99% of our and consensus estimates respectively. We reiterate our TRADING BUY recommendation for GHLSYS with a TP of RM0.79, derived from 1-SD below 5-year average PER of 29.1x, applied to the FY24F EPS of 2.7sen.

• Key highlights. In 4QFY23, revenue surged by +13.3% YoY to RM128.2mn, up from RM113.2mn in the corresponding quarter of 4QFY22. Despite this increase, the group’s bottom-line decline to RM10mn, marking a -9.9% drop YoY, due to the escalating operating expenditure, driven by ongoing investments in expanding its merchant base and transitioning its technology infrastructure to the cloud. The group’s balance sheet however remains healthy with a net cash position. Aside to that, on a QoQ basis, both revenue and core net profit increased by +8.5% and +55.7% respectively, as a result from continuous growth in both online and offline retail spending.

• Earnings Forecast. No changes to our earnings forecast.

• Outlook. In the near term, we maintain a bullish view on GHLSYS as we anticipate that current inbound tourism trends will continue to bolster its growth. However, we exercise caution pertaining its overall long-term outlook due to intensified competition among other market players as well as the potential impact of inflationary pressures on consumer spending.

Source: BIMB Securities Research - 28 Feb 2024