BUY

Investment Idea
OpenSys (M) Bhd
Price: RM0.455
Beneficiary digitalisation of banks Target price: RM0.700
By Vincent Lau | vincent.lau@rakutentrade.my
We are positive on the prospects of OpenSys (M) Bhd (“OpenSys”)
in the wave of digitisation of bank’s branches and cost
optimisation. The company is set to achieve record earnings for
FY20 and FY21. BUY with target price of RM0.70 premised on 13.6x
PER FY21 being 5-year average PER and slight discount to Bursa
Malaysia Small Cap Index FY21 14.5x PER.

OpenSys is a leading solutions provider for the financial services,

telecommunications and utilities companies with assisted-service
and self-service solutions, end-to-end managed services outsourcing,
particularly for self-service terminals, bill payment kiosks and back-
office cheque processing services. Its clientele base comprises of
Source: Thomson Reuters
major names such as AEON Credit, Alliance Bank, AmBank, Bank
Islam, Bank Simpanan Nasional, CIMB Bank, Hong Leong Bank, KLCI 1,556.3
Maybank, Public Bank, RHB Bank, Standard Chartered Bank, UOB, YTD KLCI change -2.0%
Celcom, Maxis, TNB, TM, Sabah Electricity and Sarawak Energy. YTD stock price change +23%%

OpenSys has a 80% market share in the cash recycler machines Stock Information
(“CRM”) in Malaysia with close to 4,000 against 5,000 installed CRM. Market Cap (RM’m) 135.5
Currently there are about 17,000 automated teller machines (“ATM”), Issued Shares (m) 297.9
cash deposit machines (“CDM”) and CRM. Basically, CRM has the 52-week range (H) 0.48
function of both ATM and CDM with Japan, Korea and China where 52-week range (L) 0.26
90% are CRM. This may see huge potential in Malaysia as CRM are
more cost effective. OpenSys technology partner is OKI Electric Major Shareholders
Japan for the CRM machines while proprietary software is developed Tan Kee Chung 21.3%
in-house by OpenSys giving them the leading edge in Malaysia. DBS Bank Ltd 3.4%
Chee Hong Soon 2.8%
OpenSys new growth catalyst would be from their newly launched
buySolar online marketplace platform; one stop end-to-end solar Summary Earnings Table
solutions for residential and commercial customers from purchase, FYE Dec (RM’m) 2018A 2019A 2020F 2021F
installation, monitoring, maintenance, and financing. Next would be Turnover 95.4 102.8 116.0 135.0
their SmartCIT cash-in-transit cash collection and management with EBIT 15.3 16.4 18.6 21.6
IoT secured logistic solution. Both these new products are expected PBT 14.3 15.4 17.3 20.1
Net Profit 10.2 11.1 12.8 15.4
to contribute 30% earnings in the next 3 to 5 years.
Consensus - - - -
EPS (sen) 3.4 3.7 4.3 5.2
Balance sheet is healthy with net cash of RM7.6m and has been
EPS growth (%) 52.9 9.2 15.3 20.3
paying dividends consistently since 2010 with current dividend yield DPS (sen) 1.3 1.5 1.8 2.0
of 3.3%. Prevailing net margins remains stable at 11% and is expected PER (x) 13.3 12.2 10.6 8.8
to improve gradually over the years. This would catapult group’s BV/Share (RM) 0.19 0.22 0.24 0.27
earnings to new high and expect growth momentum to continue with ROE (%) 17.7 17.3 17.9 19.0
EPS to chart growth of 15 % and 20% for FY20 and FY21 respectively. Div. Yield (%) 2.7 3.3 4.0 4.4
Sources: Company, Rakuten Trade Research
Technically Speaking
Resistance level RM0.48
Support level RM0.42
 COMPANY Definition

The stock return is expected to exceed the KLCI benchmark by more than 10% over the
Buy
next 6-12 months.

Short-term positive development on the stock that could lead to a re-rating in the share
Trading Buy price and translate into an absolute return of 10% over the next 3-6 months. Trading Buy
is generally for investors who are willing to take on higher risks.

Take profit The stock return previously recommended has gained by >10%

The stock return is expected to be in line with the KLCI benchmark (+/- 5%) over the next
Hold
6-12 months.
The stock return is expected to underperform the KLCI benchmark by more than 10%
Sell
over the next 6-12 months.
SECTOR

Industry expected to outperform the KLCI benchmark, weighted by market

Overweight
capitalization, over the next 6-12 months.

Industry expected to perform in-line with the KLCI benchmark, weighted by market
Neutral
capitalization, over the next 6-12 months.

Industry expected to underperform the KLCI benchmark, weighted by market

Underweight
capitalization, over the next 6-12 months.

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reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in
this document does not have regard to the specific investment objectives, financial situation and the particular needs of
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Published:

RAKUTEN TRADE SDN BHD (266701-P) Kenny Yee Shen Pin

Level 7, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Head of Research
Telephone: (603) 2110 7188 Website: www.rakutentrade.my