KUALA LUMPUR: Dagang NeXchange Bhd (DNeX) expects rising interest in digitalisation among businesses as they seek to ensure smooth operations during global crises like the Covid-19 pandemic which has prompted many countries to enforce movement curbs.
Its executive deputy chairman Datuk Samsul Husin said the technology solution provider is aggressively pursuing opportunities to help narrow the digitalisation gaps across all sectors, riding on its core expertise in trade facilitation.
“Governments and corporate leaders are changing how they work amid [the] unprecedented situation. Switching to full digitalisation or at least increasing the level of digitalisation is now an absolute necessity for businesses and organisations,” Samsul told The Edge Financial Daily.
“Hence, we believe global spending in IT (information technology) and digital technology will not slowdown but potentially increase given the current operating landscape, which augurs well for technology solution providers such as DNeX,” he added.
DNeX is involved in two business segments, energy and IT, with the latter contributing about 80% of the group’s revenue.
The group’s wholly-owned unit, Dagang Net Technologies Sdn Bhd, is the operator of the National Single Window (NSW), which facilitates electronic customs-related transactions and duty payments, and electronic document transfer between members of its trading community.
The platform processes over 100 million electronic transactions and RM1.8 billion worth of customs duty payment annually. It serves a diverse range of customers from logistics and manufacturing to retail and government.
Samsul said digitalised logistics and trade facilitation allow businesses to respond swiftly and mitigate limitations arising from increased mobility restrictions and social distancing. This can be achieved by increasing reliance on digitalisation in cross-border trade processes.
Additionally, he said business-to-government and business-to-business communities across borders can be seamlessly connected.
“SealNet, our web-based one-stop system is designed to ease cargo and trade management processes, connecting exporters and importers with all relevant parties, such as freight forwarders and Customs, and enabling the exchange of trade data digitally.
“We believe smart logistics and trade facilitation ecosystem are much needed to ensure seamless trade, especially when the e-commerce industries are growing rapidly in the current situation,” added Samsul.
DNeX posted a lower net profit of RM30.01 million for the financial year ended Dec 31, 2019 (FY19), down 15.11% from RM35.35 million for FY18. Revenue was marginally down to RM290.49 million from RM293.24 million.
Samsul said the group’s FY19 performance was satisfactory despite challenges in the overall market.
For FY20, he said the group does not expect the movement control order, which has been extended by another two weeks until April 28, to have a significant impact on DNeX’s financials given that a large portion of its revenue comes from the IT division.
Samsul said the NSW for trade facilitation, for example, continues to operate during the partial lockdown period as it is part of essential services. The segment also corresponds to the level of trade activities in the country, including import and export.
Other ongoing projects under DNeX’s IT division include maintenance of the Integrated Government Financial and Management Accounting System (iGFMAS) and re-engineering the tax self-assessment system for the Inland Revenue Board.
On the group’s energy division, which is hit by the low crude oil prices, Samsul said the potential cut in capital expenditure spending by global oil companies can affect provision of services in the upstream segment.
Last month, oil prices hit an 18-year low of US$22 per barrel. The price of Brent crude stood at US$28.27 (RM122.69) per barrel at press time.
“However, we are fortunate that our two major contracts, namely outdoor payment terminals and automatic tank gauging (ATG) with Petronas Dagangan Bhd, which falls under our downstream business, will continue to generate a steady revenue stream,” he noted.
DNeX bagged the outdoor payment terminal contract worth RM14 million on Feb 28. The one-year contract is for the supply of outdoor payment terminals for Petronas stations.
The ATG contract announced in July last year is for a period of two years, with an option to extend for another two years. The RM11.8 million contract is for the supply of ATG and its accessories for Petronas stations.
Besides Malaysia, DNeX also has operations abroad, including in the UK and Indonesia which have been badly hit by the global pandemic. At press time, the Covid-19 death tolls in the two countries stood at 12,107 (12.91% of total confirmed cases) and 459 (9.49%), respectively, compared with 82 (1.64%) in Malaysia.
However, Samsul said DNeX mainly focuses on Malaysia and that it is in the midst of divesting its 30%-owned associate in the UK, Ping Petroleum Ltd. It was reported that the firm hopes to secure at least RM250 million from the sale.
“Meanwhile, in Indonesia, we have completed the submarine cable installation and repair project and are exploring other job opportunities there and in the region,” the deputy chairman added.
Moving forward, Samsul said DNeX will continue to pursue cost optimisation activities within the group to drive operational efficiency and ensure earnings sustainability.
DNeX’s share price yesterday closed unchanged at 13 sen, valuing the company at RM228.55 million. The tech stock has lost more than half or 53.71% of its value year to date.
http://www.theedgemarkets.com/article/dnex-sees-rising-interest-digitalisation-amid-movement-curbs
