KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

OxPay Financial (OPFL SP)

Initiation Report: 16 November 2021

Cash is no longer king

  • OxPay is an online-to-offline (O2O) financial services technology provider with a fully integrated platform that allows both online and offline merchants to run and grow their business easily.
  • Initiate with Outperform and S$0.42 TP. OxPay is well-positioned to benefit from the growing e-commerce trend and the explosive use of e-money with its recent integration of GrabPay and Shopee Pay. The appointment of OxPay as exclusive payment provider for F&B Hive Ventures, which has over 4000 restaurants in Thailand, is expected to be significant revenue contributor from FY22 onwards.

Company Overview

OxPay Financial is a FinTech group that is principally engaged in the provision of Merchant Payment Services (MPS) and Digital Commerce Enabling Services (DCES) with a focus on servicing merchants in the retail, transportation and food and beverage industries. The company has business presence in various parts of Southeast Asia, namely, Singapore, Malaysia, Indonesia and Thailand. The company was previously known as MC Payment, prior to the reverse takeover by Artivision in February 2021.

1H21 financials: Positive core PATMI

Even though the company incurred losses of S$29.5mn in 1H21, this was due to one-time reverse takeover (RTO) expense of S$30.2mn. S$26.4mn was non-cash in nature, relating to goodwill write-off for the RTO, while S$0.2mn relates to a one-time legal fees. Eliminating the RTO expenses, core PATMI stood at S$736k, relatively flat compared to S$674k in 1H20.

High entry barriers; growing target market

The payment sector is highly regulated, serving as high entry barriers to the digital payment space. OxPay is one of the 19 non-bank companies in Singapore to be awarded the merchant acquisition license as of September this year. Even though international competitors such as PayPal and Adyen have taken up a majority of the market share for established and large merchants, the growing number of SMEs in Singapore is expected to provide room for OxPay’s growth. OxPay’s target market of SMEs, coupled with its highly accredited license, gives it an edge over other competitors in the SME space, with adequate market share for penetration.

E-commerce driving digital payments

Given that consumers’ shopping preferences are shifting from brick-and-mortar retail malls to e-commerce, the growth of online merchants is expected to spearhead the company’s top and bottom line. Singapore, Malaysia and Thailand’s e-commerce market has been on an uptrend post-pandemic, where Covid-19 has proven to be a catalyst.

Rapid expansion in 2021 and beyond

Since the RTO and boardroom refreshment, OxPay has been aggressively expanding both its revenue segments. The company set up contactless digital ordering and payment solutions, as well as cloud operating system for Eatbox, a food hall which opened in September this year. GrabPay has been added as a payment option for all Watsons stores in Singapore and in early November, the company has started to offer Shopee Pay as payment option for merchants in Singapore, Malaysia and Thailand. Moving forward into FY22, OxPay’s appointment as the exclusive payment provider for HIVE Ventures, Thailand’s first integrated food ecosystem, is expected to be a significant revenue contributor.

Cash is losing touch

As Singapore heads towards a Smart Nation, cashless payment options have been increasingly rising, with e-money capturing the most aggressive growth of 691% since 2017. ATM withdrawals, which we used as a proxy in determining consumers’ usage of cash, has been declining since 2017, inversely related to the surge in digital payments.

Valuation & Action

We initiate OxPay with an OUTPERFORM recommendation and a TP of S$0.42. Our TP is based on 25.0x to its FY22F EPS of S$0.017.


Downward pressure on margins due to saturated market.

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