Cuscapi explores expansion in Indonesia

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KUALA LUMPUR: Cuscapi Bhd is exploring opportunities for expansion in Indonesia, as it sees large growth potential in the market for its point-of-sale (POS) systems and other software and hardware solutions.

In an interview with The Edge Financial Daily, Cuscapi’s chief executive officer Her Chor Siong said POS systems in Indonesia, particularly in the food and beverage segment, were still basic, and the group still saw a lot of potential for distributing its POS systems there.

“It’s difficult to sell and distribute our POS in matured markets like Malaysia and Thailand, but in Indonesia there’s a very big opportunity for us,” he said.

“We are in talks with a couple of potential parties [for merger & acquisition opportunities], but we have not identified one party as such,” he added.

It is understood that Cuscapi, which already has a few major clients in Indonesia, will be assisting OldTown Bhd to roll out its POS system in Indonesia, following OldTown’s recent announcement that it would be expanding further into the Indonesian market.

Formerly known as Datascan Bhd, Cuscapi is a provider of software solutions and tablets specialising in ordering systems for the food and beverage (F&B) industry — particularly targeting chain restaurants.

Within Malaysia, Her said Cuscapi has a market share of more than 50%, while across the Southeast Asia region, its market share was about 20%.

On its expansion plans into China, Her said talks to acquire a China-based technology solutions provider was close to completion. If successful, the acquisition is expected to double the revenue contribution from the country to 50% of total revenue by end-2015.

“This acquisition will enhance our product offering in terms of customer loyalty management. This is something that is very account-based, rather than our usual offerings which are transaction-based,” he said.

The potential acquisition is to be funded internally via the RM29.8 million raised from the group’s rights issue of 123.2 million new shares, which came together with a bonus issue of 61.6 million new shares and a warrants issue of 123.2 million units.

On the local front, Cuscapi recently bagged three contracts worth a combined RM8 million from established F&B chains such as OldTown White Coffee, Starbucks Malaysia and McDonald’s.

The new service contract from McDonald’s involves upgrading its present POS system to a new one using McDonald’s proprietary software and hardware.

Meanwhile, Her said Cuscapi is in the midst of transforming its business model to create more long-term sustainable business — turning from short-term contracts to more long-term subscription based contracts.

“We are transforming ourselves from a solutions provider to a managed services partner where we participate actively in the operations of our customers, such as processing orders for our customers’ delivery businesses, powered by our solutions,” he said.

For the first financial quarter ended March 31, 2014, Cuscapi posted a 28.6% decrease in net profit to RM424,000 from RM595,000 previously, due to an increase in operating costs. Revenue however, rose to RM13.3 million, from RM11.8 million in the previous corresponding quarter.

Her said the increase in operating costs was only a short-term impact, as the group had recently employed more staff to keep up with its expansion plans.

Cuscapi’s stock ended 1.27% down at 39 sen last Friday, lowering its market capitalisation to RM169.5 million.

This article first appeared in The Edge Financial Daily, on June 30, 2014.