瑞信-亚太地区-互联网服务业-东盟互联网行业：电子支付——科技消灭现金-2019.3.19-139页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.19 March 2019 Asia Pacific/Singapore Equity Research Consumer Internet ASEAN Internet Sector The Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross-sector and cross-border thematic insights for our clients.Research Analysts Varun Ahuja,CFA 65 6212 3017 varun.ahujacredit-(Asia Internet and Telecom)Ashish Gupta 91 22 6777 3895 ashish.guptacredit-(Head of APAC Financials Research,India)Atul Sethi 66 2 614 6211 atul.sethi.2credit-(Thailand Financials)Danielo Picache 632 858 7758 danielo.picachecredit-(The Philippines Financials)Danny Goh 60 3 2723 2083 danny.gohcredit-(Malaysia and Singapore Financials)Laurensius Teiseran 62 21 255 37931 laurensius.teiserancredit-(Indonesia Financials)Nicholas Teh 65 6212 3026 nicholas.tehcredit-(Singapore Financials)Rikin Shah 65 6212 3098 rikin.shahcredit-(Vietnam Financials)Warayut Luangmettakul 662 614 6214 warayut.luangmettakulcredit-(Thailand Consumers)CONNECTIONS SERIES e-Payments:tech-ing away the cash Figure 1:e-Payment GTV in ASEAN-6 to reach US$130 bn by 2023E Note:GTV is Gross transaction value;Consumer market includes Offline retail and internet economy.Source:AT Kearney GDRI 2017,eMarketer,Worldpay,Google Temasek e-conomy SEA 2018,Credit Suisse estimate Cash is 73%of ASEAN-6s consumer economy.Consumer cash usage is largely high in the ASEAN-6 on poor payment infrastructure.Advances in mobile technology along with government push and tech/private equity investments have led to a surge in e-payment services over the past few years.In this report,we look at progress of e-payment in ASEAN-6,highlight company strategies and list potential e-payment winners.e-Payment GTV could reach US$130 bn by 2023E.At present,all ASEAN-6 countries(excluding Thailand)are transitioning to closed-loop ecosystems given limited interoperability.However,we believe that in the medium to long term,ASEAN-6 can evolve into a more open-loop infrastructure driven by government policies,the increased role of real-time retail payment systems and development of QR standardisation.Tech firms best placed to seize potential upside.In Indonesia,the Philippines and Vietnam,e-payment companies are ahead of banks in providing innovative use cases and funding options,while in Thailand and Singapore the banks are riding on public infrastructure(real-time retail payments,domestic schemes,etc.)to enhance their competitiveness.SEA,and VGI are our preferred picks.Thailand provides an example of a market where rising e-payment has had a deleterious impact on 2018 banking profits,with banks waiving digital transaction fees.Our simplistic analysis suggests that ID and PH have higher earnings sensitivity to declines in relevant fee income.Although we believe the key direct beneficiaries of advancement in e-payment are still in the private domain,we recommend SEA Ltd and VGI for exposure to the theme.1 5 3 16 2 19 1 9 3 17 18 65 27 130 3%8%2%8%1%8%1%7%2%9%5%12%3%10%0%2%4%6%8%10%12%14%-20 40 60 80 100 120 14018E23E18E23E18E23E18E23E18E23E18E23E18E23ESGVNPHMYTHIDASEAN-6e-Payment (LHS,2018E)e-Payment as%of total consumer market(RHS,2018E)e-Payment as%of total consumer market(RHS,2023E)(US$bn)e-Payment (LHS,2023E)19 March 2019 ASEAN Internet Sector 2 Focus tables and charts Figure 2:ASEAN-6 nations are ripe for digital payment disruption with rising digital preparedness and low penetration of traditional financial products ID MY PH SG TH VN IN CH US Size of consumer cash economy Retail market size(US$bn,2017/18E)355 107 149 52 134 112 1,033 4,910 5,033 e-commerce market size(US$bn,2017/18E)12 2 2 2 3 3 22 1,133 453 Cash as percentage of retail market 79%70%78%40%67%86%72%21%16%GDP per capita(US$,2017)3,847 9,952 2,989 57,714 6,595 2,342 1,942 8,827 59,532 Digital preparedness Population(mn),2018 266.8 32.0 106.5 5.8 69.2 96.5 1,339.0 1,386.0 327.0 Smartphone penetration(%),2018 82%80%75%147%95%68%45%90%70%4G penetration(%),2018 50%58%35%116%79%14%28%85%n/a Avg.mobile download speed(Mbps),Feb-19 10.5 18.8 14.5 55.5 16.8 23.0 10.2 30.0 33.5 Financial preparedness Bank penetration(%),2017 48%85%32%98%81%30%80%80%93%Credit card penetration(%),2017 2%21%2%49%10%4%3%21%66%Debit card penetration(%),2017 31%74%21%92%60%27%33%67%80%POS terminal(per 000 people),2017/18 3.9 15.4 2.8 45.6 11.1 3.1 2.3 22.5 n/a Number of ATM(per 100,000 adults),2016/17 55.6 46.8 28.3 65.2 117.3 24.3 22.1 81.5 n/a Bank branch(per 100,000 adults),2016/17 16.9 10.1 9.0 8.5 11.9 3.4 10.1 8.8 31.5 Source:World Bank,IMF,BIS,UN,AT Kearney GDRI 2017,eMarketer,Worldpay,Google Temasek e-conomy SEA 2018,Ookala speed test,Company data,Credit Suisse estimates Figure 3:RTP creates shared infrastructure which can aid in non-cash push;TH is ahead in ASEAN-6 Figure 4:Currently many ASEAN-6 countries have limited e-payment interoperability Note:RTP is Real-time retail payment;Source:Vocalink,Credit Suisse estimates Note:Interoperability in TH is through RTP(PromptPay);Source:Credit Suisse estimates Figure 5:Companies likely to benefit from advancement in e-payment ID MY PH SG TH VN e-payment GoPay,OVO,LinkAja GrabPay,Boost Mynt,PayMaya GrabPay,Dash True Money,Rabbit Line Pay Momo,Zalo Pay Banks May Bank,CIMB DBS Non-banks/NBFCs Aeon Credit FE Credit e-commerce Tokopedia,Shopee Shopee,Lazada Shopee,Lazada Shopee,Lazada Shopee,Lazada Shopee,Lazada CVS Indo Mart,Alpha Mart 7 eleven 7 eleven Payment gateway Midtrans,Xendit iPay88,eGHL Peso Pay,DragonPay eNETS,Stripes Siampay VTC Pay,NganLuong Region-PayPal,Asia Pay,MOL Pay Other services GHL Palawan,Cebuana NETS VN Pay,Payoo Source:Credit Suisse estimates VNPHMYSGTHINUKImmediate paymentFinality of payment24/7/365 availabilityUse of aliasesOfflineretail(C2B)B2B paymentVAS suchas bill payment etc.Request to payIndirect accessto non-banksDirect access to non-banksReal-time payment-evolution of featuresPH provides access to few non-banks currentlyCHIDMYVNSGPHINTHPeer to peer(Bank a/c)Peer to peer(e-payment)QR standardizationConsumer to business(Offline)Interoperability has several levelsClosed loop -Open loop 19 March 2019 ASEAN Internet Sector 3 e-Payment:tech-ing away the cash Cash is 73%of the ASEAN-6 economy(US$680 bn)Consumers cash usage is high in ASEAN-6 due to poor payment infrastructure.ASEAN-6 is a bloc of countries at different stages of economic evolution and hence,financial product penetration.But consumers cash usage is generally high in the region due to variety of reasons(key among them being poor payment infrastructure).In the past few years,governments have been pushing strongly to reduce cash usage in the economies,drawing inspiration from China and India.Also,developing ASEAN-6 economies see mobile phones as a medium to increase financial inclusion given the low penetration of traditional banking services.Further,investments from leading technology firms into the region have provided the required impetus to the sector.We estimate the size of the consumer cash economy in the ASEAN-6 to be US$680 bn(73%of the total market),providing strong incentives for digital payment companies to target the segment.e-Payment GTV could reach US$130 bn by 2023E All ASEAN-6 countries(expect Thailand)are transitioning to closed-loop ecosystems given limited interoperability.But we believe,in the medium to long term,ASEAN-6 can develop a more open-loop infrastructure,on government policies,increased role of real-time retail payments,and development of QR standardisation.There are talks on QR standardisation/e-payment interoperability in key markets of Indonesia/the Philippines.It remains to be seen how these discussions shape up,given resistance from some players and challenges in commercial arrangement.Regardless,we expect e-payment in ASEAN-6 to see a strong growth momentum in the next five years,and forecast e-payment gross transaction to reach US$130 bn by 2023E,10%of the consumer economy.Key growth drivers:payment ecosystem improvement,development of innovative use cases,and exponential growth in e-commerce,which is still at a nascent stage.Tech firms best placed to seize potential upside We believe the e-payment battle would be fought locally so we focus on the strategies of companies in the individual ASEAN-6 markets.Clearly,in Indonesia,the Philippines and Vietnam,tech companies are ahead of banks in providing innovative use cases and funding options,while in Thailand and Singapore banks are riding on public infrastructure(real-time retail payment systems,domestic schemes,etc.)to enhance their competitiveness.Key strategies adopted by the e-payment companies in the region include:(1)building organic use cases;(2)offline merchant acquisition;and(3)card issuance via international schemes.We think technology companies in the ASEAN-6 are best placed to seize the e-payment potential upside:Gopay and Ovo in Indonesia;Mynt and PayMaya in the Philippines;True Mobile and Rabbit Line Pay in Thailand;Momo and Zalo Pay in Vietnam;Grab Pay and Boost in Malaysia;Grab Pay and Dash in Singapore.SEA,and VGI are our preferred picks Thailand is an example of a market wherein rising e-payment has had a deleterious impact on banking profit,with banks waiving some of the digital transaction fees.Our simple analysis shows Indonesia/the Philippines have higher earnings sensitivity to declines in relevant fee income.The improvement in e-payment should also benefit allied sectorse-commerce and consumer/SME lendingas it removes some of the bottlenecks(such as payments/credit data)hampering these sectors.Although we believe the key direct beneficiaries of e-payment advancement are still in the private domain,we recommend SEA Ltd,and VGI to investors to gain exposure to the theme.With 24%equity stake in Rabbit LINE Pay,VGI is one of the few listed names providing exposure to e-payment growth.SEA Ltd is one of the leading e-commerce/online gaming companies in ASEAN-6 and should gain from digital payment enhancement.We also believe DBS is the leader in digital transformation initiatives and should benefit from the data growth expected from digital initiatives(including payments).Improvement in payment ecosystem,innovative use cases and exponential growth in e-commerce will drive non-cash usage In PH,ID,and VN tech companies are ahead of banks while in TH and SG banks are competitive Key direct beneficiaries of e-payment advancement are still in the private domain 19 March 2019 ASEAN Internet Sector 4 Table of contents Cash is 73%of the ASEAN-6 economy(US$680 bn)5 e-Payment GTV could reach US$130 bn by 2023E 16 Tech firms best placed to capture the upside potential 38 SEA Ltd and VGI are our preferred picks 53 Key e-payment company profiles 58 Country sections 68 Indonesia 69 Malaysia 81 The Philippines 95 Singapore 101 Thailand 109 Vietnam 118 19 March 2019 ASEAN Internet Sector 5 Cash is 73%of the ASEAN-6 economy(US$680 bn)ASEAN is a bloc of countries at different stages of economic evolution and thus,financial product penetration.However,cash usage among consumers is generally high in the region for a variety of reasons(key among them being poor payment infrastructure).Over the past few years,there has been a push from the government to reduce the usage of cash,drawing inspiration from the experience of China and India.Additionally,developing ASEAN-6 economies see mobile phones as a medium to increase financial inclusion given low penetration of traditional banking services.Here,we detail key enablers and drivers of digital payment and estimate the size of cash in consumer payments.Key enablers:Young demographics and mobile penetration Mobile and smartphone penetration are relatively high in the ASEAN-6 While mobile phone penetration in the region has been historically high,the improvement in smartphone penetration clearly aids in providing innovative financial services.Smartphone penetration in the ASEAN-6 reached 68-147%in 2018,with the mature ASEAN economies of Singapore and Thailand leading the penetration rates.Improvement in smartphone penetration has also been accompanied by advancement in data networks,with the region migrating to 4G services.Currently,4G penetration in the region ranges from 14-116%and is expected to increase further,led by increasing penetration in the two most populous countries of the regionIndonesia and The Philippines.Figure 6:Smartphone penetration is high in the ASEAN-6 while 4G penetration is improving Source:Company data,Credit Suisse estimates 58%of the ASEAN-6 population is aged below 34 Some of the ASEAN-6 countries also have among the youngest demographics in the world,with 60-66%of the total population of respective countries below the age of 34 and,hence,the region is likely to be more willing to adopt new technologies.Further data from the China channel,the China Academy of Information and Communication Technology,shows that WeChat(and WeChat Pay)usage takes off as users enter the workforce.In 147%95%80%82%80%68%116%79%58%50%35%14%0%20%40%60%80%100%120%140%160%SingaporeThailandMalaysiaIndonesiaPhilippinesVietnamSmartphone penetration(%)4G penetration(%)Developing ASEAN-6 economies see mobile phones as a medium to increase financial inclusion Improvement in smartphone penetration has also been accompanied by advancement in data networks 19 March 2019 ASEAN Internet Sector 6 this context,some of the ASEAN-6 are well placed for such payment services.Based on demographic data from the United Nations,145 mn of the ASEAN-6 population(led by Indonesia and the Philippines)would enter the+25 year age group and start earning over the next 15 years,and should be prime targets for payment services.Figure 7:Some of the ASEAN-6 countries have younger demographics compared to the region and world Note:Percentage of 2018 population between the age of 0-34 years;Source:United Nations Figure 8:WeChat s majority of users are of earning age Figure 9:The percentage of the population entering earning age(25 years and over)in the next 15 years Source:China Chanel,Credit Suisse Note:Percentage of 2018 population between the age of 10-24 years Source:United Nations,Credit Suisse 40%44%56%60%61%66%58%62%46%56%57%0%10%20%30%40%50%60%70%Singapore ThailandVietnam Indonesia Malaysia PhilippinesASEAN-6IndiaChinaAsiaWorld0%10%20%30%40%50%Below 1818-2526-3536-5051-60Above 60Age Distribution of We Chat Users18%20%22%26%26%29%25%28%17%23%24%0%5%10%15%20%25%30%35%SGTHVNIDMYPHASEAN-6 INCHAsiaWorld 19 March 2019 ASEAN Internet Sector 7 Key drivers:Government policies,investments by tech comp