UOB Kay Hian Research has initiated coverage on Malaysia’s e-payment industry which is poised to deliver net profit compound annual growth rate (CAGR) of 37% for 2021-2023 as consumer adoption continues to be accelerated by the COVID-19 pandemic and government support for cashless payment.
The research house expects the number of electronic data capture terminals to grow 15% in 2020-2022 while the e-commerce industry is expected to grow 21% for 2020-2025.
“Studies show that the growth of e-wallet and digital payments grew 48.9% year-on-year (yoy) in 2020 and has risen 51.4% yoy year-to-date (YTD),” noted analyst Jacquelyn Yow Hui Li in an e-payment sector update.
Currently, Malaysia boasts the highest use of mobile and digital wallets in Southeast Asia. According to the Mastercard Impact Study 2020, Malaysia led its neighbours in Southeast Asia with usage that stood at 40%.
In 2020, Malaysia’s gross merchandise value (GMV) grew 120% yoy with a total of 489,000 micro SMEs having adopted e-commerce and 378,000 SMEs having been trained to utilise e-commerce platforms. Between 2018 and 2020, the value of mobile banking and e-money transactions grew at a CAGR of 114% and 64%.
Moreover, the Government has been encouraging the masses to use e-wallets by giving out RM150 e-wallet credit to two million Malaysians. It further targets to have 400 electronic payment transactions made per capita by 2022 (2019: 150) with all government agencies to provide cashless payment options in 2022.
Above all else, Malaysia’s plan to release digital banking licences in 2022 may help to indirectly grow the captive market for e-payment providers, especially in the context of micro SME segment which the digital banking licensees have been tasked to penetrate.
“This would also benefit payment companies with more transactions being made online or through EDC terminals that allow customers to pay via QR payments and e-wallets,” projected UOB Kay Hian Research.
Premised on the bright outlook, the research house has initiated coverage on the e-payment sector with an “overweight” call for GHL Systems and Revenue Group Bhd.
“We like GHL Systems for its strong presence in the ASEAN markets and its high market share in Malaysia’s EDC terminal segment,” justified UOB Kay Hian Research.
“For Revenue Group, we like its high margins and growth in the online electronic payment segment. Also, we expect more projects and contract wins which will boost Revenue Group’s electronic transaction processing segment in the future.” – Aug 18, 2021
