Revenue Group Berhad - Research (2020)

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Counter : Revenue - 0200

Market : KLSE

Background :

REVENUE offers a wide range of technology-led multichannel payment solutions to different customers through its flagship platform, revPAY, that provides the connectivity between front-end to back-end solutions.

3 Major Products/Services for Revenue:

  • Electronic Transaction Processing(Potential Driver in future)
    • - Transaction processing services for credit cards, debit cards and electronic money payment scheme.
    1. Processing of electronic transactions via the EDC terminal channel
    2. Processing fees of electronic transactions via e-commerce/mobile channel
  • Electronic Data Capture("EDC") terminals
    • - Distribution, deployment and maintenance of EDC terminals.
    1. Monthly rental income - renting the EDC terminals.
    2. Monthly maintenance income - maintenance of EDC terminals
    3. Income from the sale of EDC terminals and spare parts
  • Solutions and services related to payments infrastructure
    • - Sales, development and licensing of software, payment network security solutions, as well as its related hardware including its maintenance services.
    1. Solutions and services in relation to payment gateway, payment network security and payment infrastructure
    2. Digital payment solutions and services such as mobile top up, phone bill payment, utilities bill payment, game credits, entertainment and ticketing services.
    3. Procurement services consumer goods from e-commerce websites, as well as the provision of cross border logistics and last mile delivery in Malaysia/
Segment Revenue(RM,000) 2016 2017 2018 2019 2020
ETP 6,709 11,675 16,717 19,745 15,864
EDC 17,162 13,070 15,597 34,688 47,232
Solutions and services 1,855 1,781 3,049 3,549 15,282

Strength :

  1. Low Debt
    2. - Debt to equity ratio is around 10% which consider healthy level.
    - Current Ratio around 1.5, which mean the company have enough cash to survive from Covid-19 pandemic impact.
  2. Scalable income base business model
    3. - ETP is transaction base recurring income. Transaction base income have a huge advantage which is Scalable Income.
    - Example the server and staffing maintenance cost is fixed, but 1 server can served thousand to million of transaction. The higher transaction count occur, then higher profit margin it have.
    - This is similar to Bursa Malaysia who major profit come from transaction fees processing.
  3. Low Cap High Growth Company
    4. Revenue is a 394 million worth company (consider small capital) but for pass 3 year it grow rapidly. Revenue grow double digit YoY. Low Cap High Growth company have chance to growth 200-300% in future.
    Revenue growth YoY
    2016(RM,000) 2017(RM,000) 2018(RM,000) 2019(RM,000) 2020(RM,000)
    Revenue 25,726 26,526 35,363 57,982 78,378
    Net Profit 4,513 6,932 7,024 9,092 9,057
  4. E-Wallet/E-Commerce Usage growth in Malaysia.
    5. - Compare to pass few year, E-Wallet and E-Commerce usage is getting more popular in Malaysia.
    - ETP income is depend on the adoption level of this 2 area. The more Non-Cash method payment, the higher ETP income will be.

Risk :

  1. Revenue is not the only Payment Processing company in Malaysia
    2. - Revenue is fairly new compare to GHL and IPay 88.
    - Luckily, payment gateway Market in Malaysia is still fairly big and yet to mature.
  2. Faith of Revenue depend on ETP income
    3. - The success of Revenue future growth will highly depend on ETP income.
    - If no merchant used Revenue service for transaction processing, EDC terminal usage will drop.
    - When lesser EDC machine deployed, ETP income will drop. Egg and Chicken problem.
    - Covid-19 Pandemic did impact ETP income slightly for year 2020.
  3. Technology Risk
    4. - Common risk for Technology solution provider company.
    - Risk like Software Security Risk or Data leak will cause reputation impact to Revenue if happened.
    - Rapid technology switch also will incur more cost for Revenue in their R&D for the solution/product.

Financial data:

Income Statement:
Product/Service's Revenue 2016 2017 2018 2019 2020
Revenue(RM,000) 25,726 26,526 35,363 57,982 78,378
Revenue yoy growth(%) 78.83 % 3.11 % 33.31 % 63.96 % 35.18 %
PBT(RM,000) 5,921 8,571 9,334 11,414 11,685
NP(RM,000) 4,513 6,932 7,024 9,092 9,057

Revenue Partner :

Disclaimer : This post is for record and research Purpose. Not Buy and Sell Advice. Please do own study before making any purchase decision.

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