We attended Revenue Group’s briefing last week.
Our view did not change even with the recent tie up with major companies like Public Bank and BIG by Air Asia. Rvenue is still a company that provides the terminal for transactions and the latest would be the mobile application for payment called revPAY.
revPAY Payment Platform
The latest revPAY is Revenue Group’s proprietary platform where a simple use of the QR code scanning could pay for almost everything you see in store.
We felt that revPAY is targeted at merchants as it really smoothens payment on the receiving end leaving out conventional credit card intermediaries with heavy platforms and expensive to use. A mere QR code scanning and it’s done! The smartphone availability removes the requirement of those bulky devices you see in stores.
The other feature for revPAY comes in the form of e-wallet solutions but we felt that this service had already been led by a bunch of service providers in the market. So the trick for development still lies in the ability to create a platform that consolidates all the payment services like the one below.
Data Harnessing
In hoping that users would do a lot of transactions on their platform, an opportunity for Revenue to collect a good quality of raw data from user seems to be a good start for generating extra income. The packaging of data for a fee could see a new stream of income for Revenue Group when the services gain traction. Companies could do what Revenue Group calls “a high impact targeting for marketing and sales”.
We shall see what will rise from this segment as we aren’t that optimistic due to the limited number of transactions at the moment. The creation of raw data and its quality would be slow for the time being. We believe that it would be a while before the application revPAY gains traction in fact the mobile payment sees tough competition with the requirment to provide plenty of incentives to use. Definitely plent of cost to incur before the lead!
New Money Lending License
Based on the market announcement last week, the Housing and Local Government Ministry granted Revenue Harvest (a subsidiary) the license to operate as a money lender.
During the briefing, this was explained further.
The execution would be to partner financial institutions in lending micro loans to their merchants. Apparently, the company has a conviction that they could use the records of their merchant’s transaction where it could serve as a credit-worthiness gauge for financial institutions to reference and lending out the micro loans.
Again, we aren’t that optimistic because we believe that banks already have those data, but they didn’t execute on somewhat a similar plan to Revenue’s. We could only conclude that merchants with high volume do not require these micro loans while smaller merchants do not even qualify for it.
Our Take
Overall, we felt that the current valuations have been fully valued and much expensive than what it should be. The share price showed that it is gradually decreasing after the IPO’s peak and that is not a good sign for the time being looking at their prospects ahead.
We would have to re-evaluate when the number from next quarters results are out. Until then we rate this as a ‘hold’.
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