MARC Ratings has affirmed its MARC-1 rating on Merchantrade Asia Sdn Bhd’s (Merchantrade) Multi-Currency Commercial Papers (CP) Programme of up to RM200 million in nominal value. The rating is confined to ringgit-denominated issuances under the programme.

The affirmed rating reflects Merchantrade’s established position in retail cross-border money transfers, accounting for 25% of domestic outbound remittances in 2024. Growth is supported by its expanding e-wallet user base and niche focus on the migrant worker segment. The rating also factors in risks from emerging fintech competitors, forex movements, and regulatory challenges.

The company posted a pre-tax loss of RM16.5 million in 2024, following a modest profit of RM1.6 million in 2023, due to persistent technology-related expenses driven by competitive demands and regulatory compliance requirements. Additionally, core remittance revenues in 2024 were negatively impacted by adverse forex movements. In response, the company implemented operational measures to mitigate forex risk by cost averaging and narrowing its window of exposure to fluctuations in exchange rates. For 2025, the company expects a return to profitability, supported by forecast revenue growth of more than 20% from increasing e-wallet users and expanding digital remittance volumes.

As of end-March 2025, Merchantrade’s total borrowings stood at RM123.4 million, primarily used to fund its remittance operations. The debt-to-equity (DE) ratio increased to 1.44x from 0.87x in 2023, driven by CP issuance and reduced equity from 2024 losses. Despite this, the DE ratio remains below the 3.0x gearing covenant. Cash and remittance pre-fund balances were sufficient to cover approximately 1.59x of the company’s outstanding borrowings.