Is This The FinTech Stock of Malaysia?

Established in 2003, Revenue Group Berhad (KLSE: REVENUE) (“Revenue”) is a cashless payment solutions provider in Malaysia offering a multichannel payment solution through its flagship platform, revPAY that facilitates the acceptance of payment transactions across various payment channels from physical electronic data capture (EDC) terminals to virtual payments to QR payments. 

I wrote about Revenue in an article last year where I did a deep dive into its business model, management and financials. I will now provide an update on some of the group’s key corporate developments in 2020.

1. Acquisition of DAX Venture Sdn Bhd (“DAX Venture”) 

On 1 April 2020, Revenue acquired DAX Venture for a purchase consideration of RM1. Started in 2018, DAX Venture aims to change the way real estate transactions are conducted through implementation of financial technology, such as real time credit assessment and digital lending. 

Instead of requiring tenants to pay a rental deposit, rentDAX stands in and pays the deposit on behalf of the tenants after conducting a comprehensive credit assessment. The landlords then entrust rentDAX to perform monthly rental collection from the tenants on their behalf. 

Meanwhile, loanDAX is the company’s in-house developed credit assessment platform used for processing tenant applications within a 48-hour response time. Since becoming a fully owned subsidiary of Revenue, DAX Venture has expanded into providing personal loans, home rental deposit and house renovation loans. 

2. Acquisition of 80% equity interest in Scanpay Sdn Bhd (“Scanpay”)

On 29 April 2020, Revenue entered into an agreement with Hong You Loong, Chiah Mon Why and Tang Wee Huang (“Scanpay’s Vendors”) for the purchase of 80% equity interest of Scanpay for a purchase consideration of RM1 million. Scanpay is principally engaged in electronic commerce services which includes online and electronic payment services (electronic money issuance). Scanpay is a licensed E-money issuer under Bank Negara Malaysia (BNM).

3. Acquisition of 40% equity interest in Wannatalk Malaysia Sdn Bhd (“Wannatalk”)

On 10 August 2020, Revenue entered into an agreement with Tan Sze Hoo for 40% equity interest in Wannatalk for a purchase consideration of RM5 million. Wannatalk is principally engaged in the provision and development of facial recognition-centred products and services, artificial intelligence (AI) powered smart content repository, AI-powered big data mining and fraud detection software and AI-powered chat box and messaging platform. 

Wannatalk has a diverse customer base ranging from financial institutions such as banks and insurance companies to public listed companies in the manufacturing sector, property management sector and Information and Communication Technology (ICT) sector. This acquisition by Revenue is intended to enhance its electronic payments (e-payments) solutions and technologies for banks, financial institutions, merchants and card issuers. 

As part of the deal, Wannatalk’s vendor (Tan Sze Hoo) provided a guarantee that Wannatalk and its subsidiaries will collective achieve a combined minimum profit after tax for the financial year ended 31 December 2020 and financial year ending 31 December 2021 of not less than RM0.8 million.   

4. Inclusion of ShopeePay in its merchant payment touch points

On 18 August 2020, Revenue inked a partnership agreement with Shopee Malaysia to enable the latter’s mobile wallet acceptance at all of its 35,000 merchants across its network of payment touch points in Malaysia. With social distancing efforts in place due to the Covid-19 pandemic, consumers are embracing digital payments for greater convenience and security. 

5. Revenue to help Caltex introduce digital payment services

On 24 August 2020, Revenue announced its partnership with Chevron Malaysia Ltd, who owns and markets Caltex in Malaysia, to install smart digital payment terminals at over 420 Caltex petrol stations. The partnership with Caltex expands Revenue’s merchant footprint and is in line with its longstanding aim to drive cashless adoption in the country. 

6. Teaming up with Huawei Technologies (Malaysia) Sdn Bhd (“Huawei Malaysia”) to develop e-services hub, focusing on small and medium enterprises (SMEs)

On 9 November 2020, Huawei Malaysia and Revenue have signed a Memorandum of Understanding (MOU) to develop an e-service hub, focusing on SMEs. The main aim of the collaboration is to build an ecosystem to develop digital innovations through which both parties can help over 900,000 SMEs in Malaysia’s move towards digital transformation and effectively boost their presence in the market. 

In order to achieve these objectives, Revenue and Huawei Malaysia will leverage digital innovation platforms which both parties will jointly develop using Huawei’s cloud and artificial intelligence (AI) technologies.

7. Revenue bags tokenisation platform job from Payments Network Malaysia Sdn Bhd (“PayNet”)

On 17 November 2020, Revenue secured a contract to develop and implement the MyDebit tokenisation platform (TSP) for PayNet, the national payments network and central infrastructure for Malaysia’s financial markets. Upon completion, the platform will be integrated with and used by more than 30 banks throughout Malaysia.

According to Revenue, tokenisation plays an important role in securing online and electronic commerce transactions which are processed by PayNet’s MyDebit switch. The use of tokens – the process of substituting a sensitive data element with a non-sensitive equivalent – is also an integral strategy for financial institutions to enhance payment security in order to combat online fraud. To date, there are approximately 45 million MyDebit cards in market circulation in Malaysia.  

In summary, Revenue’s management has been innovative and aggressive in charting its future growth plans. In the longer term, the group targets to diversify its business income sources by venturing into high margin segments, by generating recurring revenue from B2B and B2B2C solutions in addition to riding the e-commerce boom. Investors can be positive of the group’s developments and prospects, despite the disruption and slowdown in business activity caused by the Covid-19 outbreak.  

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