Share prices of potential GST beneficiaries climb

In The Edge Financial Daily Today 2013

Written by Charlotte Chong of theedgemalaysia.com 

Wednesday, 30 October 2013 10:25

KUALA LUMPUR: The shares in Censof Holdings Bhd, MyEG Services Bhd and GHL Systems Bhd — three counters considered the biggest beneficiaries of the goods and services tax (GST) when implemented in 2015 — have risen since the announcement last Friday. 

Censof jumped 5.22% to close at 60.5 sen yesterday with 39.4 million shares changing hands. MyEG recorded a new all-time high of RM2.56 yesterday, surging 7.11% from Monday’s close of RM2.39.

Kenanga Research analyst Chan Ken Yew said in a recent report that Censof, one of the major accounting solutions providers for government agencies, is seen as a clear-cut winner. He anticipates Censof to see more contract flows with the implementation of the GST.

“Besides, it may also benefit from the government’s intention to promote outcome-based budgeting (OBB) in the Ministry of International Trade and Industry and Health Ministry.”

Chan said Censof is handling a similar project for the Ministry of Finance worth RM25.47 million, its second biggest contract after the Social Security Organisation (Socso). 

JF Apex Research noted that the implementation of the GST would be a major catalyst for e-services or IT solution providers, which could benefit front runners such as MyEG and Censof, undertaking back-end systems work and training for government departments.

MyEG’s share price increased for two consecutive days after the Budget 2014 announcement last Friday. The rollout of the company’s customs service tax monitoring (CSTM) system would form the proposed GST. 

GHL Systems closed at a five-year high of 70.5 sen yesterday, after closing 3.05% higher at 67.5 sen on Monday. 

GHL Systems is striving to become a mobile top-up provider in Malaysia after its proposed acquisition of Australia-listed E-Pay Asia Ltd on Oct 4 for RM69 million. 

E-pay Asia, which derives its revenue from its Malaysian operations, is the market leader in the domestic mobile top-up business with 18,000 points of sale.

HLIB analyst Low Yee Huap said in a report that Malaysia and Asean are on an unstoppable trend towards a higher adoption of electronic payments, which is driving growth in the payment sector. 

As the growth cycle accelerates, he said mergers and acquisitions are likely to drive sentiment and the share prices of payment companies as domestic players search for increased economies of scale.

This article first appeared in The Edge Financial Daily, on October 30, 2013.