Steady growth for VADS

  • Business
  • Wednesday, 05 Apr 2006

KUALA LUMPUR: Managed network services (MNS) provider VADS Bhd expects to see robust financial performance this year boosted by the growing trend in information and communications technology (ICT) outsourcing, said chief executive officer Dennis Koh. 

“Our performance has always been consistent and we expect to continue the growth momentum. We are aiming for double-digit growth in our top and bottom line this year,” he told StarBiz, adding that VADS' RM220mil worth of contracts in hand would also contribute to the company's bottom line.  

An analyst at OSK Research is positive about VADS' prospects, going forward, as companies are now moving towards shared services and outsourcing (SSO). 

We are aiming for double-digit growth in ourtop and bottom line this year, says DennisKoh.

The Ninth Malaysia Plan (9MP) also emphasised the country's potential as a global player in the SSO industry. 

“The effect on VADS will not be immediate, but maybe over the next two to three years,” he said, adding that the research house projected its profit to grow at a compounded annual growth rate of more than 30% in the next two years.  

The analyst also expects VADS to benefit from the 9MP, especially at the systems integration level, due to the increased allocation in ICT. 

VADS recorded a 50.7% jump in net profit to RM18.3mil for the year ended Dec 31, 2005 from RM12.1mil in 2004, while revenue rose 37.1% to RM266.3mil from RM194.3mil previously.  

Koh said VADS would continue to focus on its three core divisions – MNS, systems integration services (SIS) and contact centre services (CCS) – in which there was still much room for growth. 

The MNS division contributes 50% to group revenue, and the SIS and CCS divisions 25% each. 

Koh expects a stronger year for MNS, VADS' anchor division, as companies continue to upgrade their networks and increase the use of bandwidth, thus resulting in the adoption of more applications.  

“Companies also face difficulties in hiring experienced information technology (IT) personnel,” he added. 

The company's SIS division is also well-positioned to tap opportunities resulting from the projected increase in the country's IT spending by 13.2% to US$3.51bil this year. 

Koh believes the demand for SIS would grow as companies become more reliant on applications, e-commerce and computing for business communications. 

He is also positive on prospects of the company's relatively new CCS division, which began operations about two years ago. 

“We have 1,500 people manning contact centres now compared with 65 when we started the CCS division in early 2004,” he said, adding that the company managed and operated contact centres for Celcom (M) Bhd, TMNet’s streamyx Customer Interaction Centre and a regional insurance company. 

Koh sees the SIS and CCS divisions as VADS' main growth areas. 

The company's CCS division is targeting the financial, transportation and hospitality industries while its SIS division would focus on the government sector, government-linked companies and enterprises. 

VADS, a 69.5% subsidiary of Telekom Malaysia Bhd, has done pretty well so far this year. 

In January, the company announced that it had clinched a RM5.2mil contract from MISC Bhd and in March, it won a RM5.6mil contract from Tenaga Nasional Bhd (TNB) to consolidate TNB's messaging systems. 

“We hope to secure some good contracts, especially from the SIS and CCS divisions this year,” Koh said. 

 VADS :  [Stock Watch]  [News]

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