KUALA LUMPUR (Sep 9): GHL Systems Bhd shares rose 8.65% today after CIMB Research initiated coverage on the company.

At 11:45 am, shares of the payment services provider rose 9 sen or 8.65% to RM1.13 with some 6.8 million shares traded.

In its initiation note today, IT services analyst Mohd Shanaz Noor Azam said that the company is a attractive proxy for e-payment growth in ASEAN.

“We see huge potential for e-payment services due to a combination of low debit and credit card penetration, and high cash transactions in the region,” said Azam.

He compared Malaysia’s much lower point-of-sales (POS) terminals of eight units per 1000 to Singapore at 33 units per 1000 inhabitants.

The analyst added that the company’s transaction payment acquisition (TPA) in 1Q14 is a game changer for the company as it would be able to help the company generate two revenue streams from sales and maintenance of POS terminals and from merchant sales.

“We estimate the TPA segment revenue to grow by 24%-47% in FY15-FY16, while its net profit could potentially reach RM7million – RM19 million,” Azam said.

The company is also said to have kicked of its TPA-driven growth by launching its TPA services in Thailand with Thanachart Bank, Thailand’s sixth largest bank.

Azam placed an “add” rating on the stock with a target price of RM1.60 per share.

“We initiate coverage on GHL with an 'add' rating, with a target price of RM1.60, based on 23.8 times CY16 price/earnings, which is a 40% premium to global e-payment peers. We think this is justifiable given the stronger earnings growth for the company and attractive market opportunities in ASEAN due to the lack of regional e-payment providers.

“With strong fundamentals in place and the synergies with e-pay, GHL is definitely entering a very exciting growth phase and on its way to becoming an ASEAN champion in the e-payment market. We recommend investors accumulate the stock,” he said.