Stock Name: CENSOF
Company Name: CENTURY SOFTWARE HOLDINGS BHD
Research House: OSK
Century Software Holdings Bhd
(April 6, RM1.41)
Initiate coverage with buy call at RM1.38 with fair value RM1.53: Century Software Holdings (CSHB) is a provider of financial management software and solutions with a near-monopoly on providing these solutions to federal statutory bodies (FSB). CSHB looks set to benefit from the government's push for a standard accounting system for government agencies (Saga) which will utilise compliant financial management software solutions (FMSS). Some 42% or 49 FSBs have yet to instal the Saga system, which potentially represents a market valued of RM50 million per year for CSHB to tap into. The government has so far recognised only two FMSS, namely CSHB's Saga Century and Konsortium Jaya's Saga 3 solutions.
CSHB could also look to penetrate the local councils, state statutory bodies, and government-linked companies. Although the government has yet to mandate Saga-compliance here, we opine that uniformity across accounting systems makes more sense over the long run. CSHB is still largely non-existent in these agencies and we believe this represents a potential market worth RM60 million per year.
Demand for payment aggregation software is likely to swell with increasing Internet banking. According to Bank Negara Malaysia, the volume of Internet transactions in Malaysia grew 40% to 60% per year over the last three years. The subscriber base has also jumped approximately 30% per year over the last five years, with 9.4 million registered for Internet banking facilities as at 2010. As payment aggregation software is able to simplify and increase the speed of making payments and receiving collection, CSHB should benefit from the gradual migration to e-payments.
T-Melmax Sdn Bhd (TMX) recently launched its e-Bayaran portal, a one-stop business-to-government website for businesses to make payments to government bodies. Malaysia had over 550,000 small- and medium-sized enterprises as at 2009, with over four million companies registered with the Companies Commission of Malaysia. Assuming a conservative 20% take-up rate, this could translate into annual revenues of RM15 million from monthly payments to the Employees Provident Fund, the Social Security Organisation and the Inland Revenue Department. Imputing a margin of 30%, this could boost CSHB's profit-after-tax by RM4.5 million a year. ' OSK Research, April 6
This article appeared in The Edge Financial Daily, April 7, 2011.
Company Name: CENTURY SOFTWARE HOLDINGS BHD
Research House: OSK
Century Software Holdings Bhd
(April 6, RM1.41)
Initiate coverage with buy call at RM1.38 with fair value RM1.53: Century Software Holdings (CSHB) is a provider of financial management software and solutions with a near-monopoly on providing these solutions to federal statutory bodies (FSB). CSHB looks set to benefit from the government's push for a standard accounting system for government agencies (Saga) which will utilise compliant financial management software solutions (FMSS). Some 42% or 49 FSBs have yet to instal the Saga system, which potentially represents a market valued of RM50 million per year for CSHB to tap into. The government has so far recognised only two FMSS, namely CSHB's Saga Century and Konsortium Jaya's Saga 3 solutions.
CSHB could also look to penetrate the local councils, state statutory bodies, and government-linked companies. Although the government has yet to mandate Saga-compliance here, we opine that uniformity across accounting systems makes more sense over the long run. CSHB is still largely non-existent in these agencies and we believe this represents a potential market worth RM60 million per year.
Demand for payment aggregation software is likely to swell with increasing Internet banking. According to Bank Negara Malaysia, the volume of Internet transactions in Malaysia grew 40% to 60% per year over the last three years. The subscriber base has also jumped approximately 30% per year over the last five years, with 9.4 million registered for Internet banking facilities as at 2010. As payment aggregation software is able to simplify and increase the speed of making payments and receiving collection, CSHB should benefit from the gradual migration to e-payments.
T-Melmax Sdn Bhd (TMX) recently launched its e-Bayaran portal, a one-stop business-to-government website for businesses to make payments to government bodies. Malaysia had over 550,000 small- and medium-sized enterprises as at 2009, with over four million companies registered with the Companies Commission of Malaysia. Assuming a conservative 20% take-up rate, this could translate into annual revenues of RM15 million from monthly payments to the Employees Provident Fund, the Social Security Organisation and the Inland Revenue Department. Imputing a margin of 30%, this could boost CSHB's profit-after-tax by RM4.5 million a year. ' OSK Research, April 6
This article appeared in The Edge Financial Daily, April 7, 2011.
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