E-invoice candidate, who is the best deal now?

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Malaysia is launching on e-invoice test run on the month of May 2024, while the 1st batch of compulsory participating company with annual revenue above rm 100 million will go live on August 2024.

So while the trend is going to be picked up soon, let me show you some of the listed company that are involved in e-invoice/ pos system / erp system.

Here is 4 commonly known listed player in KLSE

1. ADB - 0276

2. CENSOF - 5195

3. IFCAMSC - 0023

4. PANDA - 0290

ADB and PANDA is the 2 companies that went IPO within the past 12 months period.

1. ADB

ADB annual revenue is around RM 40 million, with net profit at rm 12 to RM 13 million region

Market capitalization for ADB is RM 522 million with share price at 95 cents region

2. CENSOF

Censof got 2 types of customers. Government and commercial. On the commercial side of business, Censof software sales is around RM 25 million (Since e-invoice is only for commercial business)

The profit for the commercial customer is around RM 7 million annually on average.

3. IFCAMSC

IFCAMSC got the higher revenue compared to all the other, averaging RM 75 million for it's software services. However, it lacks on net profit margin, with the latest 4 quarter net profit at just RM 2.6 million. IFCAMSC can go further if they embark on internal operating cost restructuring.

Market cap is RM 200 million at the current share price.

4. PANDA

Panda annual revenue is around RM 23 million, with net profit at RM 4.3 million range. The market cap for PANDA is now at RM 208 million. The share price has seen a good run forward in the midst of implementation of e-invoice.

TARGET INVEST OPINION

In my opinion, CENSOF and PANDA commercial customer revenue base is very comparable, which is sitting at the range of RM 25 million. However, looking at the valuation, PANDA is currently valued at RM 200 million while CENSOF is just RM 140 million. That is not including the government side of business profit that CENSOF is bringing in to the shareholder.

Should CENSOF trade towards RM 200 million market cap valuation, CENSOF share price will be trading at RM 0.36 per share.

Current share price (RM 0.25) of CENSOF is 30% below valuation for peer to peer comparison on commercial SME customer base. Adding in government revenue and profit will bring CENSOF value more than RM 300 million.

What do you think of the 4 selections? Which one is undervalue?

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

Blog https://targetinvest88.blogspot.com

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WHY I AM INVESTED INTO CENSOF

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As you can see, I am definitely invested in the e-invoice ecosystem. While there are many players in this industry, some are public listed and some are unlisted entity.

While I am in invested in almost all of the public listed company in KLSE which offer e-invoicing / ERP system / POS system, I found a stronger liking to Censof due to several reason

1. Strong relationship with the Malaysia government. Censof is providing software solution service to critical government services in Malaysia.

2. Established player in the POS / ERP ecosystem, with various software catering for different industry from F&B, Manufacturing and construction.

3. Have established pool of customer connected into PEPPOL framework in Singapore, Hong Kong

4. Strong cash flow and giving dividend for past 2 years

5. Net cash company

The ERP research and development is developing very fast, especially with the emergence of Artificial Intelligence.

Soon, ERP system will be equipped with AI to provide insight, projection and probably solution to business owner, which will further put deeper valuation to software provider company.

With such solution running on SaaS (Software as a Service) on cloud internet, and the requirement of the Malaysia government to mandate e-invoice as a compulsory implementation to all businesses by 2025, subscription and renewal fee will be a solid cash flow.

Censof already break out from long term down trend. New trend is back up with e-invoice factor to support stronger fundamental.

While it will take some time to see revenue coming in, however, I think the current share price is very good for long term investor looking for both capital gain and dividend yield in the future.

My previous posting on Censof

Target Invest KLSE: CENSOF GROWTH OPPORTUNITY WITH COMPULSORY E-INVOICE IMPLEMENTATION (targetinvest88.blogspot.com)

Target Invest KLSE: Malaysia to incentivize digitalization with RM 100 million grant, to benefit CENSOF and others ERP provider (targetinvest88.blogspot.com)

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

Malaysia to incentivize digitalization with RM 100 million grant, to benefit CENSOF and others ERP provider

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

Malaysia effort to make e-invoice a compulsory for all business by the 2026 will spearhead the growth of POS and ERP system. ERP/POS system provider with revenue model based on SaaS will be able to enjoy a high subscription rate, hence better profit in the coming days.

One of the more established player in the ERP landscape in the SME will be Censof, ABSS.

Accounting Software for Small Businesses | ABSS MY (abssasia.com)

ABSS had been providing e-invoicing services in Singapore and Hong Kong with PEPPOL partnership.

E-invoicing | ABSS MY (abssasia.com)

Understanding traditional invoicing vs e-invoicing through PEPPOL Framework.

E invoicing

The e-invoicing take up rate will be boosted with government initiative to provide RM 100 million digitalization grant to MSME.

Deputy finance minister: IRB to run continuous engagement sessions to firm up e-invoicing requirements | Malay Mail

I am invested in Censof because I can see the growth in the industry for the long term. Censof is also an established player with good fundamental and links to the government services which will further give Censof additional advantages.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

CENSOF GROWTH OPPORTUNITY WITH COMPULSORY E-INVOICE IMPLEMENTATION

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Malaysia is going to implement e-invoice in stages, with a compulsory implementation by year 2027 in all businesses.

LHDN to launch ‘e-invoicing’ system next year (themalaysianreserve.com)

The first stage will be targeted for businesses with turnover exceeding RM 100 million. Subsequently, in 2025 will be business with turnover exceeding RM 50 million. 2026 is for businesses with turnover exceeding RM 25 million, while 2027 will be for all business.

How is this going to benefit Censof in the long run?

Home - Censof Holdings

Censof core business is to provide software solution for financial management system to both government and commercial SME businesses. To make it easy - their business is "Software as a Service".

According to the latest figure, there are approximately 1.22 million of SME in Malaysia, contributing to 38% of the GDP in Malaysia.

Emergence of a new big market pie with compulsory implementation of e-invoice feature in all businesses.

The type e-invoice that is going to be implemented in Malaysia is going to be real time, to ensure that the e-invoice meet the necessary standards and criteria.

With the real time requirement, the software provider will need to link to LHDN system. Hence the software will need a renewal fee every year for support and maintenance.

With the adoption of e-invoice, it will be estimated that each SME will be needing to pay around RM 3000 to RM 4000 (depends on software complexity and number of users).

In summary, the compulsory implementation of e-invoice will bring about a new big market of RM 3.66 billion worth of business in ecosystem of ERP/POS system. (1.22 million SME x RM 3000)

If Censof is about the capture 15% of the market, that will be worth RM 550 million a year in revenue.

I am invested into Censof for a long term as I can see the potential of the company revenue and profit and dividend growth in the next 3 to 4 years.

Will be looking and sharing Censof software application and potential in the following update.

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88