2022-05-27 03:30:27
*Technical tracker - HLIB Retail Research – 27 May 2022*
*REVENUE: Here comes the opportunity*
*One off event. Following the Shariah compliance review yesterday, REVENUE, which cash-to-asset ratio currently stands at 51.4% (vs Shariah-compliance threshold: 33%), will be excluded from the Shariah compliant list. Although the 54% YTD plunge could have grossly reflected the negative news, we reckon there might still be a knee-jerk sell down today. That being said, any sharp pullback in REVENUE prices will be temporary as it is driven by one-off factor. Evidently, YINSON and PENTA, who both experienced a knee-jerk sell-down (Figure# 1&2) when they were excluded from the Shariah list back in 2019 and 2021 recovered 80% of the losses in fewer than 25 trading days. Hence, any potential sell-down is deemed to be an opportunity to accumulate.*
*The strong ETP segment. In 3QFY22, REVENUE’s ETP segment is growing strong (YoY: +146%), offsetting the lower EDC sales as one of the groups online merchandise customer’s sales recovered strongly with average size per transaction growing c.5%. For the uninitiated, under the ETP segment, all electronic payments, whether by EDC terminals, e-commerce/mobile commerce or QR payments processed via the revPAY platform, REVENUE will get a share of it. With the use of e-wallets having grown significantly (online and offline) post-pandemic, this bodes well for REVENUE’s ETP and EDC business. Still, as cash transactions still take a big chunk of transaction-type market shares, there is ample room for REVENUE’s ETP and EDC to grow going forward.*
*The long-awaited comeback. After Malaysia reopens the international border in 1QFY22, the volume of inbound tourists is set to recover gradually. This will further lift the group’s ETP revenue as REVENUE provides ETP services to world-renowned payment schemes, including Alipay, UnionPay, JCB, NETS and more.*
*Grab that opportunity. In anticipation of a potential knee-jerk sell down, we expect REVENUE to correct to RM0.96 (base case) follow by RM0.90 (worst case) levels, which provide a golden opportunity for investor to nibble. Benchmarking against PENTA and YINSON share prices’ performance after being excluded from the Shariah list, we reckon buying in the first day dump is the most lucrative strategy. Cut loss at RM0.82.*
*Collection range: RM0.90-0.92-0.96*
*Upside targets: RM1.06-1.12-1.16*
*Cut: RM0.82*
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