Five stocks riding the e-commerce boom

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These companies have positioned themselves to capture the secular trend, seeing a blistering ascent in terms of their business (and stock) performance

by IFAST RESEARCH TEAM / Pic by MUHD AMIN NAHARUL

E-COMMERCE, also widely known as Internet commerce, refers to the buying or selling of goods and services over the Internet.

Basically, there are four types of e-commerce, including B2C (business-to-consumer), B2B (business-to-business), C2B (consumer-to-business) and C2C (consumer-to-consumer).

Amid fast-changing technology, it is not uncommon to see consumers nowadays starting to shift their spending habits from visiting the physical shop to online shopping as e-commerce allows them to purchase whatever they want from wherever they are with just a few button clicks.

Not to be outdone, a lot of existing big businesses are also transforming their business models to be highly focused on e-commerce due to the benefits such as low cost and greater exposure to a different market segment.

In recent years, Malaysia’s e-commerce market has grown tremendously amid the rising Internet penetration rate and rapid adoption of technology such as 4G and smartphones.

The pandemic in 2020 created a strong tailwind for e-commerce as lockdowns forced stay-at-home consumers to adopt e-commerce to purchase daily necessities.

That said, the e-commerce market in Malaysia still has plenty of room to develop in the future, with the B2C segment seen growing at a compounded annual growth rate of 17% until 2023.

Additionally, after growing 6% year-on-year in 2020, Malaysia’s Internet economy gross merchandise value is expected to grow by 21% per year up to 2025 from US$11.4 billion (RM48 billion) to US$30 billion,

Catering to the adoption of e-commerce in Malaysia, there is an increasing number of transactions completed electronically instead of the traditional way of using cash.

As of 2019, the bank transfer method still dominates as the primary e-commerce payment method, followed by credit and debit cards.

Moving forward, we believe that cash transactions in the payment market will dwindle, while bank transfer and card payments will still be the main payment methods with increased market shares.

Amid the e-commerce boom during the pandemic in Malaysia, companies in a variety of subsectors such as delivery, digital payments, warehouses and even brick and mortar retailers that have positioned themselves to capture the secular trend managed to see a blistering ascent in terms of their business (and stock) performance.

Here are five Malaysian companies that benefitted from the e-commerce boom so far, and are in prime positions to continue to capture future growth.

1. GDEX Bhd (Sector: Transportation and Logistics)

GDEX provides express carrier and logistics services to the domestic and international markets.

In the advent of e-commerce, GDEX is expected to be the key beneficiary given the increases in demand for the courier services brought by the online goods transaction in the B2C segment.

Notably, GDEX has also highlighted that their stellar performance in the most recent quarter was attributed to an increase in demand for the delivery services from the online business activities on the back of the current Covid-19 pandemic.

In financial year 2020 (FY20), the express delivery segment revenue recorded a growth rate of 14.5% compared to FY19, mainly attributed to the spike in e-commerce activity.

Moreover, the revenue generated from the logistics segment also jumped by 40.7% in FY20 despite the outbreak of Covid-19.

Looking ahead, in spite of Covid-19 uncertainty, the group foresees the prospects of GDEX to remain positive, given the expectation of higher demand for express and logistics service from the online business activities.

2. Pos Malaysia Bhd (Sector: Industrials)

Pos Malaysia, along with its subsidiaries, is engaged in the provision of basic mail services for corporate and individual customers.

Over the last five years, the increasing demand in e-commerce saw an obvious growth in their courier business.

On top of that, the implementation of a series of Movement Control Orders to combat the spread of the virus further spurred the adoption of online purchasing both locally and globally, which has brought a positive impact on the courier volume.

As a result, the postal segment of the group contributed 75% of total revenue in FY20, which amounted to RM1.74 billion.

In terms of the e-commerce outlook, Pos Malaysia remains optimistic as the boom of this secular trend is far from reaching its peak yet.

Thus, the increasing adoption of e-commerce will continue to be the major catalyst toward the postal business segment of Pos Malaysia.

3. Axis REIT (Sector: Real Estate)

Axis Real Estate Investment Trust (REIT) owns and invests in commercial, office and industrial real estate in Malaysia.

The company’s portfolio consists of commercial offices, office and industrial buildings, warehouse and logistic centres, manufacturing facilities and supermarkets.

Warehouse and logistic centres account for approximately half the total net lettable area, followed by office and industrial buildings and manufacturing facilities.

In 2020, the implementation of social distancing, as well as lockdown measures, has expedited the adoption of e-commerce across the globe.

As such, the Covid-19 pandemic created a strong tailwind for the operations of logistics companies.

Axis REIT’s portfolio remained stable and concentrated on logistics warehouse properties, manufacturing facilities and office/industrial properties.

As of Dec 31, 2020, there are 19 logistics warehouses under Axis REIT’s portfolio, which caters to the rising demand for warehouses and logistics facilities amid accelerating e-commerce trends.

Moving ahead, the group foresees people and businesses will increasingly adapt to the new norm, thus they remain confident over the outlook of the industrial property segment as the adoption of e-commerce will continuously benefit their holdings segments such as warehouse and logistics facilities.

4. GHL Systems Bhd (Sector: Technology)

GHL is a Malaysian company that acts as a payment services provider with business operations in Malaysia, the Philippines, Thailand, Indonesia, Cambodia and Australia.

As one of the largest Asean’s payment services providers, GHL offers vast payment options to fulfil the merchants and consumer’s payment requirements.

With the booming of e-commerce, GHL has benefitted by increasing the adoption of making transactions or paying bills online without the use of cash.

Through its e-commerce payment gateway, eGHL, it offers a secure Internet payment gateway capability covering both card and non-card payment channels, supporting online businesses throughout the Asean region.

Last but not least, GHL also recently announced a payment option called PayLater, it will be available to selected online GHL merchants, which provides the user with a convenient way to pay for their online purchases and manage their monthly cashflow.

With the inclination toward e-commerce to grow in the next few years, PayLater is envisaged to facilitate their sales conversion and contribute to keeping their businesses thriving. In terms of the company outlook, it is worthwhile to note that the group remains positive in the long-term potential of the Asean e-payments industry and believes the trends of switching to e-payments and cashless channels will continue going forward.

5. Revenue Group Bhd (Sector: Technology)

Revenue is engaged in delivering a complete and customisable payment solution.

With the generalisation of e-commerce in Malaysia, more and more companies started to move their business into the online world. In order to fulfil the need of utilising different payment solutions in the business, Revenue has since introduced revPAY, which is a single platform that is capable of handling physical terminal payment, virtual payment (e-commerce) and hybrid payment, thus making it a highly flexible platform capable of taking many different modes of payments. Moving ahead, Revenue also revealed in its latest quarter report that the group will continuously focus on expanding its e-payment network in Malaysia and work closely with different e-wallet issuers to bring payment acceptance into digital payment terminals.


The views expressed are of the research team and do not necessarily reflect the stand of the newspaper’s owners and…

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