Tricubes to bank on govt project

  • Business
  • Thursday, 21 Apr 2011

PETALING JAYA: Tricubes Bhd plans to generate revenue from the 1Malaysia Email project via advertising, an online marketplace, and the online delivery of government bills and notices.

The financially troubled technology company also sees income potential in facilitating government agencies' recruitment and registration processes.

These services will be available on the web portal that Tricubes is developing under the project. The portal's main feature is an email account, dubbed the MyEmail account, which will be offered to all Malaysians aged 18 and above for free.

In a media statement issued yesterday amid much scepticism about the project, Tricubes chief executive Khairun Zainal Mokhtar said: “With the decline of physical mail traffic, there is substantial growth in digital mail. Our base service will be the email services at no cost to users, while our revenue sources will come from the value-added services, which will be introduced in phases.” Such services include bill and notice presentment; job boards and online registration to government agencies that currently use electronic forms; advertising; and an online marketplace.

He added that by sending bills and notices digitally, the Government was expected to save up to 50% in postal and printing costs.

Interestingly, it has been reported that Tricubes was among those bidding for Khazanah Nasional Bhd's 32% stake in Pos Malaysia Bhd, although it is widely believed that it is no longer in the running.

In response to questions over the company's capacity to implement the project, given that it is a GN3 company (a Bursa Malaysia label for Ace Market companies that are in financial distress) and that the project is a private finance initiative (PFI), Khairun said the company had shown to the Government's evaluation team its ability to generate funding for the project.

Tricubes will be investing about RM50mil in the project over the next 10 years. He added: “Our initial investment is estimated to be RM5.3mil. This includes infrastructure costs for hardware and software, maintenance and raising awareness of the project. We have secured initial financing through a combination of internally generated funds and borrowings. We expect to reinvest revenue received from the project to ensure sustainability.”

Tricubes was classified as a GN3 company in October last year after its auditors had drawn attention to certain aspects of the company's financial affairs that may cast doubt on its ability to continue as a going concern. Another trigger was the fact that its shareholders' equity had sunk to less than half of its paid-up capital. Tricubes will be delisted if it fails to implement a regularisation plan within a specified timeframe.

“A GN3 company is allowed by Bursa Malaysia to continue carrying out its business activities. In order to remain listed, the GN3 company has to regularise its financial standing. Tricubes has achieved its first milestone in its regularisation plan set by Bursa Malaysia, with the appointment of its sponsor, M&A Securities Sdn Bhd in January 2011. The sponsor is expected to submit the company's regularisation plan to Bursa Malaysia and obtain its approval no later than Oct 29, 2011,” said Khairun.

On why the company had sunk into GN3 status, he explained: “Tricubes had invested heavily in research and development, which has a long gestation period, and is well on the way to generate returns to recoup its investment.”

He added that Tricubes was selected to handle the project because it had “a full suite of enterprise offerings as well as expertise in identity management”. He said: “We understand Tricubes' proposal met or surpassed the benchmarks set by the EPP (Entry Point Project) team. It also did not require any funding or financial guarantees from the government.” EPP is a term for a key initiative under the Economic Transformation Programme (ETP).

Yesterday, there was a jarring disconnect between public opinion and investor sentiments. Despite the outcry against the 1Malaysia Email project, Tricube's shares were among the top performers on Bursa Malaysia yesterday.

The penny stock recorded the fourth largest percentage gain on the exchange after ending trading at 16 sen, up 6.5 sen or 68% from Tuesday's close. It was also the 18th most active counter, with 11.7 million shares changing hands.

Before this, the last time Tricubes had closed at 16 sen or more was in July 2007. In the last six month, the stock's average price and daily volume were 5.7 sen and 161,444 shares.

It appears that investors were responding to the fact that the project had been among the seven new ETP initiatives unveiled by Prime Minister Datuk Seri Najib Tun Razak on Tuesday.

According to the Government, the project is an initiative to provide a “unique and official email account and ID for Malaysian citizens”. It added: “The web portal will serve as a one-stop centre for government services, providing value-added services such as social networking, online bill checking and payment as well as web development toolkits for citizens and businesses organisations to creatively develop applications.”

In fact, Tricubes had already announced on April 4 that it had been awarded the project. However, there was little market reaction then, probably because the Ace Market company had not provided other details.

The ETP update on Tuesday had an impact on Tricubes in more ways than one. The public's response to the project was in stark contrast to the stock market's bullishness. There was plenty of buzz in cyberspace, most of it critical and wary of the project.

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