GHL explores M&A in Indonesia, the Philippines and Thailand

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GHL explores M&A in Indonesia, the Philippines and Thailand

KUALA LUMPUR: Following the acquisition of Australian-listed e-pay Asia Ltd (EPY), GHL Systems Bhd is exploring other merger-and-acquisition (M&A) opportunities in the region while rolling out its Internet merchant-acquiring business.

The company’s focus would be on integrating EPY into the group and to ensure it was not over-stretched, its group chief executive officer Raj Lorenz said.

“We may be looking at one M&A in the region this year if the deal is right,” he toldStarBiz, adding that it was exploring opportunities with other parties that run similar businesses in Indonesia.

He said it would consider different options for the M&A, including buying a substantial stake in an established entity that would allow it to leapfrog its market share in the archipelago.

Besides Indonesia, it will also continue to grow its presence in the Philippines and Thailand, as well as penetrating Indochina eventually.

“Our business in the Philippines is growing well although in Thailand, things are moving at a slower pace due to the political situation there,” he said.

For the fourth quarter ended Dec 31, 2013, its Thai unit reported a loss of RM572,000.

Stripping off the financial costs arising from the acquisition of EPY, the company’s normalised net profit for the three-month period stood at RM2mil, as opposed to a loss of RM400,000. Its full-year earnings improved 20% to RM5.26mil on revenue of RM64.03mil.

Meanwhile, it plans to introduce the online payment segment in the second quarter and hopes to grow it into a big player in Asean.

“We already have the software for Internet payment gateway but we are building the risk components,” he said.

According to him, the Malaysian market for online payment is underserved, and the expansion will allow it to diversify into more payment channels, in addition to the physical transaction businesses. He anticipates meaningful earnings contribution from the new business one year after the launch and notes that growth for the Internet business is exponential.

“Ultimately, you might be able to see Internet payment contributing 15% to 20% to the group’s revenue in three years’ time,” he added.

For the financial year ending Dec 31, 2014 (FY14), he expected a 10-month consolidation from the books of EPY, which could see its top-and-bottom lines double from the current size.

Its share base would expand to 415 million shares from 180 million shares previously subsequent to the completion of the merger.

Post-share issuance, it is estimated that major shareholder and executive vice chairman Simon Loh Wee Hian will own about 35% to 40% in GHL while private equity firm Creador has 20% to 25%. Tycoon Tan Sri Vincent Tan, who also owns online payment service provider MOL Access Portal Sdn Bhd, should have a smaller stake of approximately 3% from 7% previously.

Asked if there were offers to buy GHL, Raj said: “There are not many big players in this space, hence there are people knocking on our door.”

He noted that the company was on a high-growth path and the major shareholders were not keen to sell at this point.

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