FIGURE 1: GHL SYSTEMS
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1.
GENERAL
INTRO: GHL’s core business is as a payment services provider.
2.
NOTABLE
POINTS:
a. GHL is a payment services provider with key
operations in Malaysia, Philippines, Thailand, Indonesia, Cambodia, and
Australia. The Group provides payment services compassing physical, internet,
and mobile payments. GHL manages more than 397,500 footprint of payment
touchpoints across its ASEAN markets that enable credit card, debit card,
e-wallets, contactless payment, loyalty, prepaid credit top up, and bill
collection payment services.
b. In FY2019, the Group revenue grew +16.3% YOY to
RM347.7 million (2018 – RM299.1 million) with growth registered in the major
segments. Its Malaysia operation contributed the highest percentage of revenue
(78%), followed by the Philippines (13%) and Thailand (8%).
c. From the start of the COVID-19 pandemic up to
now, most of the businesses in the retail, leisure, tourism and other sectors
were adversely affected, due to reduced consumer spending. This is expected to
have an impact on the performance of the group in 2020. However, over the
medium and long term view on the payment industry, the global economy is
expected to recover and the future outlook on cashless payments will remain
positive.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 347.7 million as
reported in 2019 annual report, this is a medium revenue company.
b.
SHARE PRICE: from 2016-2021, share price overall
increased steadily from ~ RM0.90 to RM2.00.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was overall improving, which increased steadily from 1.61 to 3.87 sen.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is at 126.5, which shows that ghl’s share price is significantly overvalued compared
to its earnings.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 26.8
million, which is around 4% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a.
DIVIDEND YIELD: in 2019 financial year, GHL did
not declare a dividend payout to its shareholders.
b.
DIVIDEND PAYOUT RATIO: N/A
c. CONSISTENCY: This counter’s dividend payout has
been inconsistent (dividend paid to shareholders in 1 out of 5 years), the dividend
paid to shareholders in the last five years ranged from 0 to 0.5 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2019 financial year, GHL
reported an poor return of shareholders’ equity, at 6.02%.
b. COST-TO-INCOME RATIO: the cost-to-income ratio
is 775%, which is moderate. Unlike manufacturing sectors, IT services companies
have a much reduced cost in terms of labour cost and raw material costs. Most
of the business activities were performed online and highly automated. Hence,
IT industries generally have a much lower cost-to-income ratio compared to
manufacturing sectors.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 47%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 179.3
million, equivalent to RM 0.24 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is well supported by institutional investors, there are 22 institutional
investors at top 30 major shareholders list, including LEMBAGA TABUNG HAJI
(1.3%), EPF (0.27%), KUMPULAN WANG PERSARAAN (1.72%), as well as investment
funds and insurance funds. Its major shareholders are ACTIS STARK (MAURITIUS)
LIMITED (39.18%), PARANTAKA LTD (12.92%) and APIS GROWTH 14 LTD (10.2%).
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