KUALA LUMPUR: Forget Silicon Valley, Tel Aviv and Bangalore. To find the world’s top-performing software company, you have just to go to Kuala Lumpur.
Better known as the home of state-owned energy giant Petroliam Nasional Bhd, it’s also where shares of IFCA MSC Bhd, a maker of cloud-based software for property companies, have jumped 14-fold over the past 12 months.
IFCA’s earnings are surging just as fast as its stock after the company took an 80% market share among Malaysian developers and began expanding into China, where early adopters of its sales tracking and payment processing software include billionaire Wang Jianlin’s Dalian Wanda Group Co. IFCA CEO Ken Yong Keang Cheun (pic) predicts that the world’s second-largest economy will become the biggest market for his US$198mil software firm by 2018.
“The growth in China is incredible,” Yong said in Petaling Jaya. He plans to double the number of IFCA offices in the country to 16 by year-end.
IFCA has about 100 clients in China, where the National Bureau of Statistics estimates there were more than 90,000 real estate companies as of 2013. The country last month announced measures to make buying and selling a home cheaper, giving a boost to developers as authorities seek to cushion a slump in the property market that has weighed on economic growth.
The stock gained as much as 1.5% toward a record close before ending unchanged at the noon break in Kuala Lumpur.
Wanda uses IFCA’s software for its cost systems, bidding and capital leases, Huang Chunlei, an assistant to the president of Dalian Wanda and deputy general manager of the company’s IT department, said via email.
In Malaysia, 800 of the biggest 1,000 property developers are its customers, Yong said. The company’s software sales in the country surged 76% in 2014 as a new goods and services tax prompted companies to upgrade their software to comply with the change. Profit jumped 12-fold last year to RM21.1mil and Yong said he’s “confident” earnings would climb to another record in 2015.
“The good thing about the software is that it is niche for property developers,” Chow Yuh Seng, general manager for IT at Mah Sing Group Bhd, Malaysia’s fifth-biggest developer by market value, said.
Shares of IFCA have surged 1,321% over the past 12 months, the most among software companies worldwide with a market value of at least US$150mil (RM550mil), data compiled by Bloomberg show. That compares with an average gain of 46% for global peers.
“There was a strong theme for IT and software-related development companies last year, and this year is a continuation,” said Danny Wong, chief executive officer of Kuala Lumpurbased Areca Capital Sdn., which owns shares in IFCA. “The shift to Internet and technology is the new way of doing things.”
IFCA isn’t the only Malaysian software company with booming sales. Grabtaxi Holdings Pte, a mobile application that assigns cabs to nearby commuters, has grown to become South-East Asia’s largest taxi-booking mobile application, luring investments from Temasek Holdings Pte, Singapore’s state-owned investment company, and SoftBank Corp, the Japanese wireless carrier controlled by billionaire Masayoshi Son.
While Malaysia isn’t known as a hub for technology companies, the government has tried to support the industry since 1996, when it introduced the Multimedia Super Corridor, a special zone to attract technology investments and multinational companies.
The success of IFCA’s business may already be reflected in the share price, according to Ang Kok Heng, the chief investment officer of Phillip Capital Management Sdn Bhd, which manages US$428mil (RM1.57bil), said by phone in Kuala Lumpur. Shares are valued at 30 times reported earnings, versus 17 times for the benchmark FTSE Bursa Malaysia KLCI Index, according to data compiled by Bloomberg.
“We normally don’t chase a stock,” Ang said.
IFCA planned to boost recurring income by introducing a software rental service that would make its offerings more affordable for customers via monthly subscriptions, Yong said. The firm also plans to set up a property listing website by year-end.
IFCA’s profit will probably jump at an annual rate of 228% over the next three years, according to CIMB analyst Nigel Foo. – Bloomberg