This article first appeared in The Edge Financial Daily on July 31, 2019

KUALA LUMPUR: Despite having acquired two companies this year, Revenue Group Bhd is still on the prowl to acquire companies that can strategically enhance its business or help it move into another part of its supply chain.

So far this year, the ACE Market-listed payment solutions provider has acquired a 51% stake in Buymall Services Sdn Bhd and a 70% stake in Anypay Sdn Bhd. It also obtained a licence to operate as a moneylender in March.

“The group has been operating in the B2B (business-to-business) sector for the last 15 years. The time is now for us to start getting involved in the B2C (business-to-consumer) sector,” its managing director and group chief executive officer Eddie Ng Chee Siong told The Edge Financial Daily in a recent interview.

He said the three new businesses will give the group a steady income stream under the services business segment that will be the fourth pillar of Revenue.

Buymall operates an online marketplace and provides procurement services for consumer goods from overseas e-commerce websites as well as cross-border logistics and last-mile deliveries for Malaysians, while Anypay is a bill payment gateway.

With the new services business segment, coupled with its existing hardware and transaction business segments, Ng expects to see equal top-line contributions from these three businesses of 30% each, with the remaining 10% coming from its solutions business in the next few years.

For the financial year ended June 30, 2018 (FY18), the hardware business segment contributed the main bulk (55%) of the group’s total revenue, followed by the transaction business segment (40%), while the rest came from its solutions business segment.

On July 18, Revenue announced its collaboration with Hong Leong Bank Bhd to offer payment acceptance and services to Singapore’s NETS cardholders to shop at retail outlets under GCH Retail (Malaysia) Sdn Bhd and Guardian Health and Beauty Sdn Bhd in Malaysia.

GCH and Guardian are among the largest retail operators in Malaysia, operating Giant, Cold Storage, Mercato, TMC, Jasons Food Hall, G Express, Shop Smart Retail and Guardian.

Currently, the NETS payment acceptance is being piloted at eight Giant stores, one Cold Storage store and nine Guardian outlets in Johor, and one Guardian outlet in Melaka.

Ng said the group is aiming for the NETS payment acceptance to be available nationwide via its digital electronic data capture (EDC) or android terminals by the end of next year.

He also noted that the NETS exchange rate is cheaper than the rates offered to Visa and Mastercard cardholders, adding that NETS cardholders will immediately know the exchange rate when payment is made.

While this paves the way for Revenue to enter the Singapore market, Ng said the group is in no rush to expand its presence overseas and will continue to focus on the local market, saying that Malaysia still has a lot of opportunities.

“Of course we want to expand our footprint to the overseas market. But Revenue is still a growing company and I believe that it is still too soon for us to enter the regional market,” said Ng.

He also pointed to the group’s partnership with China-based Alipay through the latter’s e-commerce arm Lazada to process payments made by consumers via Internet banking for purchases on its e-commerce platform.

This is expected to increase the transaction value processed “significantly”, said Ng, adding that Revenue expects its total transaction value to grow by double digits in the next financial year.

Revenue processed over RM1 billion worth of transactions in FY18, excluding the Visa and Mastercard transactions which it does not charge processing fees.

Firm eyeing transfer of listing to Main Market next year

With growing earnings, the group — listed on July 18 last year — is hoping to transfer its listing to the Main Market of Bursa Malaysia next year.

For the nine months ended March 31, 2019, Revenue saw its net profit grow 88.3% to RM6.85 million, from RM5.12 million a year ago, while revenue was up 33.8% at RM43.94 million from RM23.34 million, thanks to higher sales of EDC terminals to customers.

Revenue expects to close FY19 at a record profit. Its net profit stood at RM6.84 million for FY18, down slightly from RM6.98 million for the previous year.

As at June 30, 2019, Ng noted, Revenue had already deployed more than 15,000 EDC terminals, from 2,000 terminals as at early-December last year.

Ng noted that the group has seen its transaction volume growing by double digits annually.

With full recognition of earnings from the services business segment from FY20, coupled with a growing transaction volume, Ng expects Revenue to do better in FY20 than in FY19.

In line with the growing earnings, Revenue’s share price has also been rising. The counter saw its share price more than quadruple from its initial public offering price of 37 sen to close at RM1.61 on Monday, valuing the group at RM373.52 million.

The stock’s share price hit a high of RM1.69 on July 11.

However, Ng said the group has no plans to undergo any corporate exercise at this juncture. It also has no plans to implement any dividend policy.

“Revenue is still a growing company. We will move into that phase (dividend plans) later when the group [has] stabilised,” he added.