CONVERGENCE of technologies is the next big thing in the IT industry and TFP Solutions Bhd hopes to ride on this for growth opportunities as it looks to roll out new product solutions for enterprises.
“In the past decade, we have seen a rapid rise of new technology trends like big data application, cloud computing and Internet of things (IoT). As these technologies get established and advanced in acceptance and maturity, integration among them is critical for the success of enterprises,” TFP Solutions group managing director Quah Teik Jin tells StarBizweek.
“Without proper planning, enterprises may tend to create computing silos, a move that could prove not only expensive but also less efficient for them. The real value of big data is the insights it produces when analysed.”
But companies are grappling with the issue on how to unlock data’s hidden potential given the speed and scope of data being generated daily that has surpassed the capabilities of traditional management tools, Quah says. “Cloud on the other hand, as the delivery model for IT services, has the potential to drive the management of the data that can enhance business agility and productivity.”
TFP Solutions is an ACE-market listed stock that offers software and services for improving the total factor productivity of enterprises – a concept that basically measures operational efficiency. The company’s major shareholders are Rapportrans Sdn Bhd with a 32.05% stake and Milan Premier Sdn Bhd with 19.02% interest.
Rapportrans is the privately-held vehicle of Datuk Hussian @ Rizal Bin A. Rahman who emerged as a shareholder when TFP Solutions bought into Comm Zed Sdn Bhd two years ago, while Milan Premier is a vehicle of Quah and Alex Lim who are the founders of TFP Solutions.
However, stock market investors can be forgiven if they have not heard of the stock as the company has kept a low profile since listing in 2008.
“In the last several years, we have been reorganising our operations to build up our core competencies. We realised that technology trends are moving towards synergies and we have evolved ourselves in order to offer products for a converged infrastructure.”
After two loss-making years in 2009 and 2010 following the economic crisis then, TFP Solutions has been making steady progress since the restructuring, Quah says. For the financial year ended Dec 31, 2013 (FY13) its net profit was up by one-fold to RM3.85mil from the RM1.88mil posted a year before. Revenue, meanwhile, came in at RM96.8mil in FY13, up 55% from RM62.4mil previously.
To be noted is that these numbers are coming from a low base and the challenge for the company moving forward as agreed by Quah is to ensure “sustainability of the business with good profit margins.”
TFP Solutions executive director Dr Chew Seng Poh points out that the company has the platform over its competitors to offer converged solutions given that it already is involved in three segments: utility computing, big data analytics and virtualisation and software.
“The last is for the space of connected devices and we plan to get into this via an acquisition if we come across the right asset or alternatively enter into a partnership with an existing player.”
To fund its growth plan, the company has proposed a private placement representing 10% of its paid-up capital and is looking to raise up to RM8.78mil, according to Bursa Malaysia filings. It also has cash amounting to RM12.3mil as at end-December last year.
Driving optimism on prospects, according to Chew, is the expected rise in IT spending by companies. Data by Gartner Inc showed that global Information Technology spending in 2014 is expected to grow 3.2% to a total of US$3.8 trillion compared with a 0.4% growth last year. Malaysia’s total IT spending is forecast to grow 10.2% to reach almost RM69.8bil this year while total IT spending in the Asia-Pacific region is forecast to reach US$758bil this year. In another research report, Frost & Sullivan has forecast a 9.5% compounded annual growth rate in IT spending from 2013 to 2017 in Malaysia.
The company currently has an order book of RM26mil that it is looking to boost by 20% in 2014. TFP Solutions’ clients are mostly small and medium enterprises from the private sector while about a quarter are multinationals that include some government-linked companies listed on Bursa Malaysia. It has expanded overseas with a small footprint in Cambodia and Indonesia.
“The contributions from these markets are still small as we are working on developing and stabilising our presence there. Once established, we will look to expand to other markets in the region,” says Quah.
Stock performance wise, TFP Solutions is trading at 20 sen, which is below its initial public offering price of 48 sen. The company’s management is of the opinion that the stock is undervalued but market observers reckon that the poor share price performance is due to investors’ reservations about its prospects previously. But with the company having recently put in place the building blocks of growth, it may be a matter of time that it is on the radar of investors. But before that it has to show progress on the plans that it has envisioned.
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