Company exploring opportunities in IT, to launch e-wallet service
After nearly a decade of losses, DATAPREP HOLDINGS BHD is now working on a turnaround plan as it seeks to register a profit in its current financial year of 2018 (FY18).
With the presence of its new major shareholder, Widad Business Group (WBG), Dataprep plans to explore many untapped opportunities in the fast-evolving information technology (IT) segment.
To achieve this, as one of its strategies, Dataprep is eyeing to launch its very-own e-wallet business by this year.
Describing it as a “volume-game”, Dataprep chairman Datuk Mohd Rizal Mohd Jaafar (pic) expects the new e-wallet business to increase the top line contribution of Dataprep’s existing payment solutions segment to over 10%.
Currently, the payment solutions segment only contributes about 3% to the overall revenue.
Dataprep’s e-wallet service also stands to benefit from the synergistic relationship with WBG, which has been involved in IT services.
“We are banking on the growing domestic cashless environment as the new growth engine for Dataprep.
“Our e-wallet service, which will be ready within the next six to nine months, will focus on the Malaysian education sector. As a start, we will initiate the e-wallet service in WBG’s Widad University College.
“Just imagine, students will be able to do all their transactions on campus such as paying for food in the cafeteria and also their tuition fees, only by using their mobile phones,” Mohd Rizal tells StarBizWeek.
He also adds that Dataprep’s e-wallet service will be extended to about four public universities within 12 months of its inception.
Mohd Rizal is also WBG’s group chief executive officer.
WBG, which emerged as Dataprep’s single largest shareholder in October last year, aims to turn the latter into a global IT player within the next five years.
Mohd Rizal says that Dataprep is now actively looking at potential tie-ups with global IT players, in order to further expand its footprint internationally.
Considering Dataprep’s current net cash position, the group is well-positioned to undertake any potential merger and acquisition exercises.
As at Sept 30, 2017, the company sits on a net cash of approximately RM17mil, which could be utilised for for its operational expansion going forward.
“We strongly believe that Dataprep has a promising future, especially with the collaboration with global IT giants. We are in the midst of discussion with a potential partner and we hope to announce our first tie-up by July this year,” says Mohd Rizal.
WBG’s founder, Tan Sri Muhammad Ikmal Opat Abdullah, had bought over the entire 64.2% stake belonging to Dataprep’s major shareholder VXL Holdings Sdn Bhd, via its subsidiary Wardah Communication Sdn Bhd.
Muhammad Ikmal has reportedly forked out a total of RM43.2mil for this controlling stake purchase. His entry into Dataprep has triggered a mandatory general offer, which subsequently raised his stake marginally to 64.4%.
The Main Market-listed Dataprep is a smallish company, with a market capitalisation of RM130mil. The stock has risen by nearly 41% over the last 12 months.
Hopes have remained high on WBG’s emergence as the major shareholder, in order to resuscitate Dataprep which is struggling due to lack of major contracts and few IT business opportunities.
Being a diversified business entity, with interests spanning over integrated facility management (IFM), construction, operations and maintenance, among others, WBG could be the very catalyst for Dataprep’s return path to profitability. Yesterday, Dataprep shareholders unanimously approved for recurrent related party transactions between the group and WBG to be undertaken in the future.
This means that Dataprep could also anticipate more business opportunities such as those related to IFM and education, from its parent. WBG had previously outsourced its IT services, which can now be taken under Dataprep’s roof.
Looking at Dataprep’s financials, it has been on the mend, with the group’s net loss in the first half of FY18 narrowed significantly to RM28,000.
A year earlier, the company recorded a net loss of RM1.76mil. The improvement in its bottom line is mainly as a result of Dataprep’s strengthening revenue.
In the same period, the group’s top line almost doubled to RM25.88mil, as compared RM13.07mil on a year-on-year basis. This was on the back of more deliveries and managed services projects secured by the company.
Currently, Dataprep’s order book is valued at about RM30mil, which could last the company over the next three years.
These contracts were primarily secured prior to entry of WBG.
In order to sustainably replenish its contracts, Dataprep has also identified RM120mil worth of contracts for bidding.
On top of its contract-based projects, Dataprep is also leveraging on the relatively-new Digital Free Trade Zone which went live in November 2017.
Last week, Dataprep entered into a memorandum of collaboration with URC E-Commerce (M) Sdn Bhd (URCE) to provide training and consultancy services for Alibaba.com in Malaysia. This collaboration will offer a sustainable recurring income stream for Dataprep in the long run.
“URCE is one of the only three Malaysian channel partners of Alibaba. With the partnership with URCE, Dataprep will be training small and medium enterprises (SMEs) to become product exporters under Alibaba’s platform.
“This will provide us with a sustainable commission-based income in the future. By conservative estimates, we project to make at least RM2mil profit in one-year period from this service,” says Mohd Rizal.
Moving forward, Dataprep will be undertaking cost optimisation measures to further buttress its financials.
Mohd Rizal projects the measures to contribute an additional 10% to 20% to the company’s bottom line. However, the full-year impact from the cost-optimisation measures may only be seen in the FY19.
“The new management is still about two months old in Dataprep, following WBG’s entry as a shareholder. However, we have already started to pursue cost optimisation approaches in order to cut unnecessary costs.
“Thanks to the synergy between WBG and Dataprep, we are rationalising certain IT applications to eliminate redundancies. In short, we are pursuing numerous measures to enhance productivity and to improve Dataprep’s cashflow,” he says.
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