Market acceptance for blockchain ‘challenging’

Systech, which fell into the red in the second quarter of its financial year ended March 31,2021 (FY21), plans to revert to cyber security as its mainstay since demand for this is increasing, CEO Raymond Tan said.

PETALING JAYA: Solutions provider and cyber security firm Systech Bhd, which was banking on blockchain to take the company forward, now says that market acceptance for it is “a bit challenging”.

The company, which fell into the red in the second quarter of its financial year ended March 31,2021 (FY21) plans to revert to cyber security as its mainstay since demand for this is increasing, CEO Raymond Tan said.

The smallish Systech, which has a market capitalisation of less than RM100mil, first ventured into blockchain in 2017 when it bought a 49.99% stake in Rofarez Solutions Sdn Bhd, which has since been renamed Syscode Sdn Bhd.

The plan was to grow this business and make it an equal profit contributor with the company’s other two segments.

“But the selling circle for blockchain is too small here and competition is too much with some players being very aggressive, ” Tan, who controls over 50% of the company, told StarBiz.

Blockchain is loosely defined as a digitised, decentralised public ledger of transactions that can be traced and verified at any point in time by relevant parties.

Data is saved inside what is called cryptographic blocks, which are joined together forming a chain of data.

What this essentially means is that there is an added layer of security and transparency for these data and they cannot be easily hacked.

Tan claimed that most companies currently prioritised cyber security over blockchain and had no budget for the latter although both were not necessarily replacements for each other.

“Cyber security has become the lead business segment for the Systech Group and is expected to register a further 30% growth in revenue for the coming financial year, ” said Tan.

He said over the past one year, the company managed to secure cyber security jobs from corporates such as banks, insurance companies and stock brokerages.

“We actually have 70% of the sales locked in already for the current financial year, ” he said.

Tan said with the ongoing Covid-19 pandemic and the continued travel restrictions imposed affecting business sentiment and operations, Systech Group expects the coming financial year to still remain challenging.

“But we are cautiously optimistic that we will return to the black in the short term, ” he said, but did not state when.

Starting off as a solutions or software provider more than a decade ago, Systech, which is in a net cash position, had in 2014 bought 51% of Sysarmy Sdn Bhd for RM255,000, marking its foray into cyber security.Systech provides cyber security services to organisations, monitoring the traffic on networks of companies and raising red flags if it detects anything “suspicious”.

In its recently concluded financial quarters, its cyber security business reflected a pick-up in demand although the software side of its business registered a decline, contributing to the company’s losses.

Tan said awareness on the importance of cyber security had been in the past year increasing as organisations struggled to stabilise their operations amid a spike in demand for remote working tools.

As more individuals go online for work and to do simple everyday things like banking and grocery shopping, demand for cyber security services will continue to show an uptrend, according to him.

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