Systech eyes more M&As


Gallen Lee Choon Teng, executive director and CEO of Systech Bhd

PETALING JAYA: Fresh from the acquisition of a strategic stake in TalentCloud AI Sdn Bhd ( Talentcloud.ai), IT and cybersecurity firm Systech Bhd is actively eyeing more mergers and acquisitions (M&As) to fuel its bottom line growth.

Group chief executive officer and executive director Gallen Lee Choon Teng told StarBiz the company is exploring M&As in the local market as there are good potential IT candidates for acquisitions.

“Forging ahead, our strategy involves both organic and inorganic growth. We are actively exploring M&A opportunities that not only create synergies but also with high growth potential. We hope to conclude at least one to two acquisitions in the next six to 12 months.

“Our focus is on acquiring technology companies that are innovative in emerging technology sectors such as artificial intelligence (AI), cloud computing and data analytics, as they can complement and enhance our overall product and service offerings.”

This includes companies that provide strategic advantages that enable expansion into specific geographical markets and contribute to the broadening of our customer base, he added.

The company acquired an 80% stake in Talentcloud.ai for a total cash consideration of RM14.4mil in July this year.

Talentcloud.ai’s business complements Systech’s existing human capital management (HCM) solutions.

One of Talentcloud.ai’s unique strengths is that it utilises AI software for HCM and data analytics, Lee said, noting that this would significantly reduce hiring and recruitment cost, lower workforce error and improve employee experience and retention rates.

It is also the only cloud-based HCM software compliant with Bank Negara’s financial regulatory requirements during the process of cloud adoption.

Talentcloud.ai’s customers include Malayan Banking Bhd, Konica Minolta and Pos Malaysia Bhd.

“The acquisition comes with a profit guarantee by the vendor that Talentcloud.ai shall achieve an audited net profit of RM1.5mil each year for two years (March 31, 2024 to March 31, 2025), which would certainly enhance our earnings, going forward.

“Talentcloud.ai will only start contributing to our earnings from the second quarter of financial year 2024 (2Q24) onwards, given the transaction was completed in July 2023,” he said.

With the support of Systech, Lee said Talentcloud.ai plans to broaden its array of solutions to include other software such as customer relationship management, finance and business intelligence.

“Ultimately, we want to leverage on its software as a service business model to further amplify its recurring revenue that provides clear earnings visibility for the group,” he said.

Systech reported a profit in its first quarter of financial year ending March 31, 2024 (FY24), after 11 consecutive quarters of losses, Lee said, noting that this shows the initiatives it has implemented are starting to bear fruit.

Lee said there is still ample room for improvement and business streamlining to be undertaken.

He expects these efforts to be gradually reflected in earnings and coupled with the profit guarantee, the group anticipates its turnaround to gain further momentum and the improvements to continue.

“Thus, the outlook for Systech is promising and we see FY24 as a breakthrough year for the group,” he said.

On the new management on the group’s board, Lee said: “As part of the new management, we understand Systech’s business and more significantly, we see strong potential in Systech.

“We want to propel the company forward, focusing on innovation and creating long-term value for our stakeholders.

“We, the new management, believe that we can harness our vast knowledge, experience and network to unlock the value of the group. Our aspiration is to establish Systech as a regional leader in our industry. “

In September this year, Smartpro Capital Sdn Bhd emerged as the controlling shareholder in Systech after buying 180.7 million shares, or 52.25%, from Leinet Technology Bhd for RM39.75mil cash, or 22 sen per Systech share.

Smartpro, controlled by Liew Choon Lian (50.1%) and JCap Sdn Bhd (49.9%), has tabled an unconditional mandatory general offer for the remaining Systech shares at 22 sen each.

JCap is owned by Sun Jianwei and Hooi Jia Hao, each holding 85% and 15%, respectively. Liew is also the chairman and chief executive officer of Evergreen Corp.

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