KUALA LUMPUR: DAGANG Nexchange Bhd (DNeX) is switching to an expansion mode this year to maintain its growth momentum ahead of the goal of turning into a RM1 billion company by 2020.
Group managing director Zainal Abidin Jalil said its expansion plans included mergers and acquisitions (M&As) as well as organic growth for its current diversified businesses — information technology and e-services and energy.
“We hope to expand our businesses through M&As so as to strengthen our business model and create a bigger portfolio mix.
“We will no longer depend on national single window (NSW) in the future and, at the same time, we are also hoping to win more contracts for our energy, IT (information technology) and services businesses,” he told NST Business.
Under the NSW for trade facilitation, six core services will be provided, namely eDeclare, ePermit, ePermitSTA, ePCO, eManifest and ePayment.
“As we are an entrepreneurial company, we will aim to create value for our businesses. We will continue to leverage our long-standing relationship with the government,” Zainal added.
He said this year, DNeX expected to continue its momentum of growth in earnings and profitability.
“We aim to achieve a market capitalisation of RM1 billion by 2020,” said Zainal.
The company’s current market capitalisation, as at Friday’s close of 46 sen a share, was about RM801 million.
He said through its energy business, DNeX planned to take over another brownfield oil asset to boost its position as a key player in the local oil and gas sector.
Zainal said the company expected high returns from the 30 per cent stake purchase in independent upstream company, Ping Petroleum, last year.
“Purchasing (30 per cent stake in Ping Petroleum) was a good entry for the company as part of our plan to participate in the upstream sector.
“Therefore, we will continue to choose brownfield assets that produce good cash flow.
“On the first day of completing the transaction (purchase), we were already generating cash flow and considering that the price (of oil) was heading towards US$50 (RM220) per barrel, the company was likely to enjoy a rating upgrade for this investment.
“The core profitability was relatively strong with the current (oil) prices, so we are pleased with the investment in Ping Petroleum,” he said.
Zainal said a new asset under consideration was near the current Ping Petroleum asset in the Anasuria cluster at Central North Sea, Scotland.
In addition, the company was hopeful of securing a second upstream contract from a multinational company following its recent Petronas Carigali job win.
Zainal said DNeX’s M&A plans would not be limited to the takeover of a brownfield asset in the Anasuria cluster, but could involve other business units, including IT and e-services.
However, he declined to provide more details.
On its IT and e-services business segments, he said DNeX was conducting a feasibility study for the Malaysian government at the Thailand-Malaysia border.
This was part of the government’s plan to expand the vehicle entry permit (VEP) and road charge (RC) systems for foreign-registered vehicles entering Malaysia.
The company had also been appointed an exclusive project consultant by Thailand-based Tiffa EDI Services Co Ltd for the implementation of VEP and RC for the Thailand transport ministry.
“The Thailand-Malaysia border will require the same capital expenditure of about RM45 million as in the Singapore-Malaysia border.
“Despite expected lower revenue than Singapore-Malaysia border, it would contribute significantly to the company’s revenue,” said Zainal.