Revenue yes, cash no
CASHLESS payment solutions provider Revenue Group Bhd is optimistic of a growing cashless society in Malaysia and aims to focus on deploying more electronic data capture (EDC) terminals in the near term.
Revenue Group managing director and group CEO Eddie Ng Chee Siong ( pic) tells StarBizWeek that the group is seeing a shift in spending behaviours, with a growing use of cards, e-wallets and Internet banking for daily transactions.
“This shift is happening worldwide and e-payments are gaining traction.
“Statistics have shown that cash in circulation is declining, outpaced by cashless electronic transactions.
“Besides that, ATM cash withdrawals are stagnating.
“These findings indicate that the market is embracing e-payments,” he says.
This augurs well for Revenue Group as the deployment of more EDC terminals shall translate to higher revenue for the group, from the rental or sale of terminals as well as electronic transaction processing services.
In line with this, the group is expanding its IT team to enhance the technology of its proprietary platform revPAY to keep up with global standards and cater to higher volume electronic transactions.
“I believe it works both ways. “When we deploy more EDC terminals, we create more value-added services, which will in turn facilitate more e-payments.
“Historically, we achieve double digit revenue growth every year and we believe this will continue.
“We target to expand the IT team from 35 employees to 50 employees within 24 months after listing,” says Ng.
Revenue Group, which is due to be listed on the Ace Market of Bursa Malaysia on July 18, operates in three business segments, namely the distribution, deployment, and maintenance of EDC terminals, electronic transaction processing services for credit and debit cards, as well as solutions and services related to payment infrastructure.
The group’s flagship revPAY facilitates the acceptance of payment transactions across various payment channels, be it physical EDC terminals, e-commerce transactions or Quick Response (QR) payments.
Its customers include banks, non-bank institutions, physical store merchants, online store merchants, and e-money payment scheme.
Essentially, Revenue Group operates as an acquirer and vendor for banks.
The group’s role as an acquirer is to authorise card transactions and connect issuing banks on the merchant’s behalf.
On the other hand, its role as a vendor is to deploy EDC terminals.
The group is looking to raise a total RM20.6mil, of which RM8.1mil will be allocated for capital expenditure, primarily for the purchase of 9,000 units of digital EDC terminals or smart point of sales (POS) terminals equipped with a camera, which can accept quick response (QR) payments.
Some RM4.04mil of the IPO proceeds is earmarked for the upgrading and enhancement of the revPAY platform as well as recruiting additional information technology (IT) personnel, while RM2.5mil will be used to repay bank borrowings.
In addition, RM1.5mil shall be utilised for business expansion to Cambodia and Myanmar, RM1.77mil for general working capital requirements, and the remaining RM2.7mil will be used to defray listing expenses for the IPO.
Revenue Group is issuing 55.71 million new shares at 37 sen apiece, of which 11.14 million new shares will be made available to the Malaysian public.
For the financial year ended June 30, 2017, Revenue Group registered a net profit of RM6.93mil, with a net profit margin of 26.1%.
This was on the back of a revenue of RM26.53mil.
It is noteworthy that the group’s net profit in FY17 grew by 54% from FY16’s net profit of RM4.51mil, while FY16’s net profit doubled from FY15’s.
Revenue breakdown by business segments in FY17 was electronic transaction processing at 44%, rental of EDC terminals at 32%, sales of EDC terminals at 17%, and solutions and services at 7%.
Revenue Group is rolling out its QR payment system product and e-wallet solutions for issuers by the second and fourth quarter of this year, respectively.
Ng says the group is currently working with UnionPay to enable QR payments on revPAY, to be followed by other card schemes.
Generally, the process from development to certification of a new payment solution takes about three months for each card scheme.
Apart from that, Revenue Group is expected to make a foray into Cambodia and Myanmar within 24 months after listing.
Ng says the group is in talks with both global companies and banks in Myanmar and Cambodia, but has yet to formalise any strategies.
Revenue Group has an extensive card scheme portfolio, namely, Mastercard, Visa, MyDebit, FPX, Touch ‘n Go, UnionPay, NETS, Diners Club International, Discover, JCB, and Company A.
Its peers are GHL Systems Bhd and iPay88 (M) Sdn Bhd.
Based on a annualised earnings per share for the financial period ending December 31, 2017, Revenue Group has a price-earnings (PE) ratio of 12.3 times, as at IPO.
As for GHL Systems, the PE ratio as of June 4 is 45.7 times.
While GHL has an additional prepaid top up and bill collection payment service, it only has MyDebit, FPX, Company A, and Touch ‘n Go in its portfolio.
“Our competitor is actually cash.
“For Malaysia to become a cashless society, the drive comes from cardholders -- we are just facilitators.
“The central bank and banks play a very important role in driving cashless payment solutions.
“Meanwhile, our role is to add on more solutions and innovative applications to enhance the user experience, and above all, maintaining the highest standards of security and compliance,” says Ng.