GHLS was initially making losses from 2008 to 2011. However, in 2012, it started to turn around with a net profit (NP) of RM4.4m. This was following the emergence of a new group of management/shareholders in end-2010, which led to a progressive implementation of strategy changes such as the divestment of its loss-making China subsidiaries and the acquisition of COD, a software solutions provider for financial institutions in Thailand. This has led further to the group recording NP of RM2m (surging 80% YoY) in its recent 1Q13 results, which is already half of its FY12 full-year earnings. This was on the back of a +42% YoY rise in the revenue with an improved EBITDA margin of 16.2% from 14.2% in 1Q12.
Fair value at RM0.46. We believe the group could achieve our FY13 NP projection of RM7.8m judging from its decent NP of RM2m in 1Q13 and the sustainable revenue growth in its shared and solution services. We value the stock at RM0.46/share @ 7.0x FY14 PER, which is at a 25% discount to the FBM Small Capital Index PER of 9.3x given its relatively small market cap and illiquidity concerns. We believe the stock has good potentials given its relatively cheap valuation and strong earnings prospect. The stock is also trading at an undemanding valuation of 5.0x forward PER now compared to its regional peers’ PER of 15.6x.
The directors’ profile do not support your argument. The executive directors have strong background in technological company & their experience match GHLSys industry very well! They also have the right business skill to expand the company.
From Annual Report 2012, Directors’ profile:
(1) LOH WEE HIAN, Executive Vice Chairman:
He has a strong background in the telecommunications industry where he formed Telemas Corporation Sdn. Bhd. in 1989, a mobile phone retailer and master distributor for Ericsson. He then co-founded e-pay (M) Sdn Bhd in 1999 and was the Managing Director responsible for strategic planning and financial performance of the company. Under his leadership, e-pay (M) Sdn Bhd became one of the leading electronic top-up processors in the South East Asia region and the leading processor in Malaysia. He listed e-pay Asia Limited on the Australian Stock Exchange (ASX) in 2006, where he is also the Executive Chairman.
He is one of the founding members of Young Entrepreneurs Organization Malaysia Chapter, a global, non-profit educational organisation for business owners.
In 2006, he was selected as the winner for Ernst & Young Entrepreneur of The Year Malaysia 2006 Award under the Technology Category.
(2) KANAGARAJ LORENZ, Group Chief Executive Officer
Raj, born in 1957, entered the payment solutions industry in 2001 when he joined DBS Bank Limited to create the first direct debit, online real time payment gateway in Singapore. In 2002, the business was sold to NETS Pte Ltd (“NETS”), a company owned by the Singapore Banks, which operates the national EFTPOS, Cashcard and ATM networks in Singapore. Raj was the Managing Director of NETS’s Online Payment subsidiary, eNETS Pte Ltd’s (“eNETS”) and was instrumental in growing the business from inception to its present dominant position in Singapore, serving banks in Singapore and regionally.
Concurrent to this role, Raj also managed (until 2007) the International Markets Business of NETS, a business group responsible for expanding NETS overseas through acquisitions, partnerships and alliances with overseas payment operators. While in this role, NETS acquired a subsidiary in China as well as entered into agreements with China UnionPay and MEPS that enable Malaysians and Chinese consumers to use their Bank cards on NETS’s network.
Prior to NETS, Raj was employed for more than 12 years with Citibank Australia and Malaysia. He covered several functions during his career with the bank, including; Marketing Head for a Corporate Banking business unit, Financial Controller and Risk Manager. An accountant by training, Raj is a Fellow of the Institute of Chartered Accountants in England & Wales, and the Institute of Chartered Accountants in Australia. He is also a member of the Malaysian Institute of Certified Public Accountants.
(3) NG KING KAU, Executive Director
Mr. Ng, born in 1950, began his career as a manager in an electrical chain store in Malaysia between 1975 – 1978 before joining American Express as the Country Manager of Malaysia & Brunei. He was the Vice President – General Manager for American Express in Malaysia and Brunei before being promoted to Vice President – Business Development for American Express Asia Pacific Australia Division based in Hong Kong. He was instrumental in building and making the American Express Card the leading payment card in Malaysia.
Mr. Ng, known as ‘KK’ in the payment and loyalty card industry in Asia, has a total of over 30 years of experience in building, operating and turning around payment and loyalty card businesses.
He left American Express in 1986 and joined MBf Group Malaysia where he organized and built MBf‘s Card business and led it to become the largest card company in Malaysia and the largest MasterCard issuer in ASEAN region in 1993. He left MBf as President of Card and Payment Services in 1995 and founded InterPay International Group which has investments in payment and loyalty card businesses.
He was a Director of Maestro International Inc. from 1993 to 1995, which is a subsidiary of MasterCard International Inc. From 2006 to 2009, Mr. Ng became the Chief Executive Officer of Cardtrend International Inc., a public listed holding company in the US which was involved in the payment and loyalty card businesses in China and other Asian countries. Prior to his resignation on March 1, 2011, Mr. Ng was the Managing Director of Payment Business Solutions Bhd. which was spun off from Cardtrend International Inc. and is the holding company for a group of payment and loyalty related business, including Cardtrend Systems Sdn. Bhd., a MSC status company in Malaysia.
jz my 2 cents based on what i know from the ppl that worked with them.. it is up to u to take it or not.. for short term investors, this should be a good counter.. take care :)
I have to agree with jpleow, current management doing the right things. People who have worked (past tense) would be under the old management. I have not bought GHL shares and believe anything below 0.33 would be a good price to pick up this share. It is on my watch-list for now.
to not confuse u all, they are ppl who worked with the new management and some are still working with them now.. did u wonder y the rights issue was announced too?
they never think from the technical perspective, software development without proper SDLC and requirements that are not feasible technically. Sooner or later, the whole system will collapse. it is only matter of time if they still keep it this way.
all thing go up must go down, so investigate , buy and sell , nobody want to be the sharehold of the company but we only want to share their profit only , i'am right or wrong , few hundrend a day it ok , more is bonus , but i believe ths stock will for good with in 6 months ahead
----------------- Posted by daudbinrajab > Aug 1, 2013 02:16 PM
all thing go up must go down, so investigate , buy and sell , nobody want to be the sharehold of the company but we only want to share their profit only , i'am right or wrong , few hundrend a day it ok , more is bonus , but i believe ths stock will for good with in 6 months ahead -----------------
Hehehe, it's now party time for short term speculators & gamblers. Welcome & go ahead to goreng, goreng, goreng :D
It is now in speculative phase since speculators using the recovering earnings as an excuse to goreng it. For investors, we need to observe whether the earnings keep on improving in coming quarters.
GHL Systems hit a high of 51.5 sen during intra-day session, the best since November 2009. Based on the daily chart, the prevailing trend is bullish and it will remain that way, as long as the rising 14-day simple moving average, now resting at the 43 sen, continues to support prices. The immediate upside objective would be to fill the 56–56.5 sen minor gap.
BIMB Securities is maintaining its Buy call on electronic payment specialist GHL Systems Bhd after the company reported first half net earnings of RM3.6mil, making up 47% of full year forecast.
Revenue and net earnings for the half grew by 31.8% and 31.2% from aggressive expansion in the sales force, tapping into new markets in the region. Margins were also improved.
However, quarter-on-quarter revenue saw some contraction by about 7.6% mainly due to lower rental revenue of terminal equipment. EBITDA (earnings before interest, tax, depreciation and amortisation) margin was also lower due to higher salary cost from the aggressive expansion in the sales force. Hence, net earnings was also lower by 21.7%.
“Nonetheless, net earnings will further improve in the second half and our forecasts remain intact.
“We maintain our FY13 numbers (of RM7.8mil) and revised FY14 earnings forecast by 18% (to RM9.8mil) by factoring in higher revenue. Following the earnings revision, our target price is revised to 57 sen based on FY14 earnings per share of 5.2 sen over the sector price-earnings ratio of 11 times. Maintain Buy,” the research house says.
ghl one of the best bet around, its disadvantage is being small cap but still one of the best growth com, if all world economies including ours flare ok , should see minimum, one fold stock price appreciation by year end
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
EdmundSSKoh
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Posted by EdmundSSKoh > 2011-11-30 10:18 | Report Abuse
Some bad news for GHL China operation!!!!!!