A slow start to FY22F
? 1Q22 results missed expectations due to lower-than-expected rental and
hardware sales from shared and solutions services divisions.
? We cut FY22-24F EPS by 4-7% to reflect lower maintenance revenue under
shared services and lower TPV growth due to changes in the merchant mix.
? Reiterate Hold with a higher RM1.50 TP, now based on 42x CY23F P/E.
1Q22 results came in below expectations
Revenue rose by 6.8% yoy to RM93m in 1Q22, driven by higher contribution from the
transaction payment acquisition (TPA) division, w hich registered 15.1% yoy sales growth
on the back of higher total processing value (TPV), w hich rose 1.4% yoy. Despite higher
sales, GP margin fell by 5.6% pts yoy to 35% in 1Q22, mainly due to low er maintenance
revenue under shared and solutions services. Thus, core net profit in 1Q22 fell by 21% yoy
to RM5.4m. Overall, 1Q22 core net profit w as below expectations, making up 16% of our
FY22F net profit forecast and 14% of Bloomberg consensus.
1Q22 TPV grew 1% yoy to RM6.2bn
GHL’s 1Q22 TPV grew by 1.4% yoy to RM6.2bn, mainly driven by e-Pay (+12.9% yoy).
How ever, this w as partially offset by low er TPV in electronic TPA services (-1.3% yoy).
Despite the low er TPV, electronic TPA services gross profit grew by 4.8% yoy to RM8.8m
due to 1) changes in the product mix, and 2) changes in the merchant mix as more
transactions w ere captured at physical merchants over online merchants as lockdown
measures gradually eased.
Revising down EPS by 4-7%; cautiously optimistic for a recovery
We cut our FY22-24F EPS by 4-7% to reflect low er POS terminal hardware sales and
rental from financial institutions due to concerns over weakening consumer sentiment amid
a rising inflation and interest rate environment. Meanwhile, w e revise down our FY22F TPV
growth forecast from RM28.7bn to RM25bn to reflect the changes in merchant mix.
How ever, w e see room for higher GP margin from the TPA segment in view of potentially
higher shares from Tier-3 and -4 merchants, which offer relatively higher shares of
merchant discount rates to GHL. Overall, w e project 15% yoy net profit growth in FY22F,
driven by an expected pick-up in economic activities such as the resumption of tourism
with border re-openings across Southeast Asia and higher merchant acquisition activities.
Reiterate Hold with a higher RM1.50 TP
Following our earnings revision, w e keep our Hold rating on the stock with a slightly higher
RM1.50 TP, based on a higher 42x CY23F P/E as w e update our target multiple to reflect
the improving sentiment in the domestic consumer sector. We still peg our valuation to –
0.5 s.d. below its 5-year mean P/E of 48x. Although w e like GHL as it rides the grow ing
trend for electronic payment adoption in Southeast Asia, w e think the market has already
priced in its strong earnings recovery potential given that the stock trades at 55.5x CY22F
P/E, about 1 s.d. above its mean.