Is GHL Systems Berhad the Paypal of ASEAN?

GHL Systems Berhad (KLSE: GHLSYS) is a leading payment service provider and one of the top merchant acquirers in the ASEAN region. It has operations in Malaysia, Philippines, Thailand, Australia, Indonesia and Cambodia. The Group provides payment services and solutions for physical, internet, and mobile payments.

GHL’s share price has bucked the overall market trend on Bursa Malaysia and has risen close to 17% for the past 2 months. In this article, we will take a closer look at the business, management and financial aspects of the Group, to assess whether it is worth our investment.

Business Overview

GHL manages more than 360,000 footprints in ASEAN that enables credit card, debit card, e-wallets, contactless payment, loyalty, prepaid top-up and bill collection payment services. The Group has three core business segments:

  • Transaction Payment Acquisition (“TPA”) comprises mainly of revenue derived from two distinct sub-segments:

    i) E-pay services which include telco prepaid and other top-up and bill collection services for consumers (“reload and collection services”). E-pay is the largest provider of reload and collection services in Malaysia. It has approximately 43,500 acceptance points nationwide. That includes petrol chains, large convenience store chains and general stores.

ii) GHL’s direct merchant acquiring and electronic payment services (“electronic payment services”). This TPA electronic payment services business is driven by partnerships with domestic banks in the respective markets and a leading China e-wallet provider.

  • Shared Services includes the sale, rental and maintenance of EDC terminals and other payment acceptance devices.
  • Solution Services includes the sale and maintenance of hardware and software that are proprietary to the Group. These include the network devices and related software, outsourced payment networks management and processing of pre-paid and loyalty cards.  

GHL’s e-payment ecosystem can be illustrated as follows:

In 2018, sale of prepaid air-time contributed the largest share of group revenue at 32.9%.The sale of value-added solutions, rental of EDC equipment and sale of goods accounted for 32.6%, 21.2% and 13.2% respectively.

Recently, GHL has formed a partnership with Aspirasi. The partnership will provide small-medium enterprises (SMEs) and micro-entrepreneurs in Malaysia with digital tool to power its financing business. Aspirasi is a digital financing platform that offers financial services under Axiata Digital, a subsidiary of Axiata Group Bhd (KLSE: AXIATA).

The tie-up allows GHL to leverage on Aspirasi’s smart credit ratings, for its client on-boarding and merchant scoring. Loan applications can be completed within 48 hours, which provides a massive improvement in customer service.

Future Prospects

GHL is an attractive proxy for e-payments growth in ASEAN. The population income and development of broadband infrastructure are great tailwinds for the company. GHL stands to benefit from increasing adoption of e-payment services across ASEAN, given its wide network in the region.

In 2018, Malaysia contributed the lion’s share of group revenue at 76.4%.  Thailand, Philippines and Australia accounted for 11.8%, 11.4% and 0.4% respectively. In 4Q2018, GHL expanded to Cambodia with the acquisition of a 51% stake in Speed-Pay PLC.

The Group sees TPA as a key growth engine as e-payments gain popularity. This is driven by regulatory directives, growing market acceptance and consumer preferences. Going forward, GHL will be focusing on strengthening its positioning in Malaysia, Philippines and Thailand. The Group will also be commencing acquiring at a stronger pace in Indonesia and Cambodia.

Major Shareholders

Global investment firm Actis, via Actis Stark (Mauritius) Limited, is the largest shareholder of GHL with a 39.50% equity stake. Mr. Hossameldin Abelhamid Mohamed Aboumoussa and Mr. Ali Zaynalabidin Haeri Mazanderani represents Actis on the board.

Executive Vice Chairman, Mr. Loh Wee Hian (Simon) is the second-largest shareholder of GHL with a 17.77% equity stake. Mr. Loh has a strong background in the telecommunications industry. He formed Telemas Corporation Sdn Bhd in 1989, a mobile retailer and master distributor for Ericsson. He co-founded e-pay (M) Sdn Bhd in 1999 and was responsible for strategic planning and financial performance. Under his leadership, e-pay (M) Sdn Bhd became one of the leading electronic top-up processing companies in South East Asia and the largest in Malaysia. He listed e-pay Asia Limited on the Australian Stock Exchange (ASX) in 2006. When the market for electronic reloads started maturing in 2010, Mr. Loh acquired a stake in GHL and replaced the existing board and management team with more experienced managers. In 2014, GHL acquired e-pay (M) Sdn Bhd.

UK-based Apis Partners, via Apis Growth 14 Ltd, is the Group’s third-largest shareholder, with a 9.44 stake. Apis is represented by Mr. Matteo Stefanel, who serves as a non-independent non-executive director of GHL.

Recent Insider Trades

Recently, private equity investor, Creador IV L.P. increased its stake in GHL to 6.91%. In the same process, Mr. Loh Wee Hian (Simon) reduced his ownership in the Group to 11.63% (direct and indirect interest). The presence of several strategic investors (Actis, Apis and Creador) are votes of confidence on the e-payment business and GHL’s prospects.


Measure 1: Growth in revenue and profits

The Group has seen respectable growth in revenue of 16.10% and profit after tax of 34.58% over the past 6 years. The growth in profit after tax is higher than growth in revenue. This means that the Group has high operating leverage. Its business has high fixed costs and low variable costs. As it gains a wider economic of scale, its profit will grow even faster.

Companies with fixed cost structures enjoy an increase in margins and profits when there is rapid growth in sales. Conversely, in an economic downturn, margins and profits deteriorate when sales struggle.      

Measure 2: Profitability

Notice that while gross profit margins have been relatively stable, GHL’s net profit margins have increased from 3.9% in FY2014 to 8.3% in FY2019. Besides, the return on equity ratios have also improved from 2.9% in FY2014 to 6.3% in FY2019.

Measure 3: Liquidity

GHL does not have any liquidity issues as it has recorded positive current and cash for the past 6 years. The Group has cash and cash equivalents of approximately RM150.00 million. Its total borrowings stands at RM26.20 million as at 31 December 2019.

Round 4: Dividends payout

GHL does not have a history of paying dividends. During the past 6 years, the Group has only made a single dividend payment of RM0.005 per share in FY2016. When a company is growing, my preference is for management to retain its earnings and to reinvest it back into the business.


With a closing share price of RM1.61 as at 28 February 2020, GHL is trading at a price of earnings (PE) ratio of 42.94. It has a market capitalisation of RM1.21 billion. The Group has good prospects as it is riding on tailwinds of the ASEAN economies and cashless payments.  However, as its current valuation is high, growth investors might wish to place the Group on their watch list for now.

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