MoneyGram Expands in China - Analyst Blog
13 10월 2012 - 12:09AM
Zacks
Expanding its money transfer business in China,
MoneyGram International Inc. (MGI) announced the
addition of multiple locations in the Zhejiang state of China,
through the strategic alliance with Rural Credit Union (RCU) last
month.
Accordingly, MoneyGram will now offer its money transfer
services to 96 more branches of RCU in China. With more than 4,000
locations of RCU in 1,000 towns of Zhejiang, this state offers
ample scope of expansion since it is a very densely populated with
about 54 million inhabitants.
Hence, the company aims to offer low-fee, user friendly and
secure remittance services in this region. This is an attempt to
shore up demand to remit money across 196 global countries where
MoneyGram has a strong foothold with a global network of more than
284,000 agent locations, primarily including retailers,
international post offices and financial institutions.
Money transfer business remains the driving force for MoneyGram,
which has been spreading business across the globe through various
recognized financial institutions. Particularly, the company has
been vigorously strengthening its position in China, which ranks as
the second-largest money receiver in the world with annual
remittances of over $62 billion, according to the World Bank.
As a result, MoneyGram has accelerated its agent location
expansion in China over the last several quarters. In 2012 itself,
the company allied with the leading China Guangfa Bank (CGB) to add
132 locations, and extended services across the Bank of China
network for another 3 years.
Meanwhile, the company is also enhancing its brand awareness by
developing user-friendly payment solutions that suit the new market
trends. With regard to this growth strategy, the company is making
efforts to expand its cash-to-account service to other banks,
including Industrial and Commercial Bank of China (ICBC), as well
as new online services.
Recently, MoneyGram also eased out quick money transfers in
Australian dollars in China. For this, the company has encouraged
branches of Bank of China, CITIC Bank and Industrial and Commercial
Bank of China to dole out payments in the required currency.
Over 12,000 locations of these banks have been identified so far to
kick start remittance from Australia, which has about 320,000
Chinese immigrants, in to China without any exchange fee.
We believe expansion through organic strategies is expected to
drive MoneyGram’s growth in the medium- to long-term. This growth
strategy also justifies management’s guidance of 7–9% top-line
growth for 2012.
The aggressive business developments are also crucial for
MoneyGram to maintain its competitive edge, particularly against
the steady global growth of its arch-rival Western Union
Co. (WU). The company carries a Zacks Rank #3, which
translates into a short-term Hold rating, while the long-term
stance remains Neutral.
MONEYGRAM INTL (MGI): Free Stock Analysis Report
WESTERN UNION (WU): Free Stock Analysis Report
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