- BUY Entry – 0.192 Target – 0.219 Stop Loss – 0.179
- OxPay is principally engaged in the provision of merchant payment services and digital commerce enabling services, offering online-to-offline (O2O) solutions through a fully integrated platform with a focus on servicing merchants in the retail, transportation and food and beverage industries. OxPay currently has a presence in four geographical markets – Singapore, Malaysia, Indonesia and Thailand – with ambitions to become a regional player.
- From losses to profits. OxPay’s revenue jumped 53.2% YoY to S$17mn in FY21, while gross profit surged nearly 2-fold to S$10.6mn. Gross profit margin improved significantly from 32% in FY20 to 62% in FY21, mainly due to an increase in remittance activities from its merchants. Even though the company was in a loss-making position of S$26.8mn in FY21, this was due to one-off RTO listing expenses of S$26.4mn and non-recurring expenses relating to the RTO transaction of S$3.6mn. Excluding these, adjusted net profit stood at S$3.2mn, a turnaround from losses of S$1.9mn recorded a year ago.
- Killing two birds with one stone. OxPay will acquire up to 20% shareholding in AppsPOS, enabling it immediate access to AppsPOS’ network of over 300 F&B and retail merchants for both E-commerce and Cloud-Based Point of Sales Solutions. AppsPOS has more than 1mn users on its mobile apps/website in Asia, facilitating over S$300mn worth of Gross Merchant Value annually. Upon acquisition, OxPay will be able to churn revenue for both its Digital Commerce Enabling Solutions (DCES) and Merchant Payment Services (MPS) segment.
- Riding on the Buy Now Pay Later (BNPL) trend. OxPay announced in December 2021 that its wholly-owned subsidiary, MC Payment Malaysia, has entered into a partnership agreement with IOU Pay (Asia). Pursuant to the partnership, OxPay will be able to add the BNPL option into its online e-invoicing, Quickpay and web payment acceptance platform in Malaysia. In addition, OxPay has also collaborated with BNPL brand PaySlowSlow in Singapore and will provide the brand with payment gateway and merchant acquiring services. PaySlowSlow Singapore targets to roll out BNPL services in 1Q22.
- Recent catalyst. The company announced on 18 April that it has been appointed as the official digital payment service provider for Q&M Dental’s clinics in Singapore. The rollout of the digital payment services programme will be done in two phases. The first phase will comprise all non-credit card payments processing, such as GrabPay and PayNow,, while the second phase will consist of credit card payments processing, such as Visa, Mastercard and instalment payment plans. Q&M Dental’s 21 clinics will participate in the pilot testing before the program is progressively rolled out to all 99 clinics in Singapore by 2QFY2022.
- We currently have an OUTPERFORM rating on OxPay with a 12M TP of S$0.30, implying a potential 50% upside from the last closing price.
OxPay Financial Ltd (OPFL SP) (Source: Bloomberg)