KGI Research analyst Megan Choo has kept her “outperform” recommendation on OxPay Financial with a lower target price of 30 cents from 42 cents previously.
According to Choo in her March 15 report, the lower target price is due to the overall de-rating of valuation multiples across the sector.
In her report, Choo listed four points that contributes to her positive outlook on the counter.
For one, OxPay saw a reversal into the black with an adjusted net profit of $3.2 million in FY2021 ended December 2021, from FY2020’s net loss of $1.9 million. This was driven by a surge in revenue of 53.2% y-o-y in FY2021. Its gross profit margin jumped to 62% in FY2021, from 32% in FY2020.
“Even though the company was in a loss-making position of $26.8 million in FY2021, this was due to one-off reverse takeover (RTO) listing expenses of $26.4 million and non-recurring expenses relating to the RTO transaction of $3.6 million,” explains Choo. “Excluding these, adjusted net profit stood at $3.2 million, a turnaround from losses of $1.9 million recorded a year ago.”
In addition, OxPay is riding on the buy now pay later (BNPL) trend is a plus for Choo.
The company announced in December 2021 that its wholly-owned subsidiary, MC Payment Malaysia, had entered into a partnership agreement with IOU Pay (Asia). The partnership means that OxPay will be able to add the buy now pay later (BNPL) option into its online e-invoicing, Quickpay and web payment acceptance platform in Malaysia, thereby catering to the growing consumer demand for deferred payment choices.
“OxPay has also collaborated with BNPL brand PaySlowSlow in Singapore and will provide the brand with payment gateway and merchant acquiring services,” says Choo. “PaySlowSlow Singapore targets to roll out BNPL services in 1QFY2022, with 500 merchants and monthly gross transaction value of approximately $1 million, which is expected to translate into additional processing volume for OxPay.”
Next, OxPay’s acquisition of a 20% stake in AppsPOS will enable it to have immediate access to AppsPOS’ network of over 300 food and beverage (F&B) and retail merchants for both e-commerce and cloud-based point of sales solutions. “AppsPOS has more than 1 million users on its mobile apps/website in Asia, facilitating over $300 million worth of Gross Merchant Value annually,” notes Choo.
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Additionally, OxPay announced earlier this year that it has partnered with TranSwap, a global banking-as-a-service platform with multiple central bank licenses across the UK, Singapore, Hong Kong and Indonesia.
“With this partnership, OxPay will offer neobanking products such as the issuance of local and global virtual name bank accounts to clients for collection, payment and conversion of currencies, as well as global cross-border payment and issuance of cards,” she adds.
Despite the positives, Choo has identified a potential downside risk in the form of potential margin pressure faced by OxPay due to competition.
Shares in OxPay are trading flat at 15 cents on March 15.
Photo: OxPay
