Yoma’s jump into mobile payments is well-timed, positive: Daiwa

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Yoma’s jump into the mobile payments business with the acquisition of a 34 percent stake in Telenor’s Wave Money platform, is positive, Daiwa said in a note dated Tuesday.

“We believe Yoma is bringing the right product (mobile payments), with the right partner (Telenor) and at the right time (hyper growth phase in the payment industry),” it said. “This appears to be a key step in its efforts to diversify its business into non-bank financial services, which we believe is a positive development.”

Daiwa noted that Wave Money is currently money losing, but management expects it to turn cash flow positive in fiscal 2019.

Wave Money’s platform currently offers domestic remittances and a mobile wallet service, and the company is seeking licences to facilitate cross-border remittances, Daiwa noted.

‘Step in the right direction’

While the deal may seem to raise strategy concerns, management explained in an analyst call that the company is seeking to enter the lucrative non-bank financial services segment, which includes micro finance, payday loans, and lending to drive the automotive and consumer business, Daiwa noted.

It added that while it might appear to overlap with Yoma’s sister company Yoma Bank, management said the bank is under tight license restrictions as a domestic bank in Myanmar, with lending rates capped at 13-16 percent, compared with the 30 percent allowed for non-bank financial institutions.

“Overall, we believe this a step in the right direction for the company as it would support its efforts to grow its recurring earnings base, away from the lumpy property market,” Daiwa said. “However, as property market outlook still remains challenging at the moment, we maintain our Hold rating.”

The stock is up 2.38 percent at S$0.43 at 2:44 P.M. SGT.