IoT, managed telco network services to drive REDtone’s FY16 earnings



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KUALA LUMPUR: REDtone International Bhd expects the current financial year ending May 31, 2016 (FY16) to be better than last year, underpinned by contribution from its Internet of Things (IoT) and a healthy order book from its managed telecommunications network services.

Currently, REDtone's order book for managed telecommunications network services — which include building, maintaining and operating large-scale WiFi hotspots, base stations and fibre infrastructure — is valued at RM100 million, which the group will start to recognise in FY16.

In FY15, REDtone reported a 59.8% jump in net profit to RM11.38 million or 2.18 sen per share from RM7.13 million or 1.42 sen per share in FY14. The group also recorded a 6.1% increase in revenue to RM150.37 million in FY15 from RM141.76 million in FY14.

Meanwhile, REDtone International managing director Datuk Wei Chuan Beng said there was good potential growth in IoT services with growing usage of IoT devices, such as smartphones, among Malaysians.

According to him, the IoT business offers REDtone's latest managed value-added services, like data services centre, cloud services, applications and healthcare solutions to enterprises, government and the healthcare industry, all of which will provide a new revenue stream for the group in FY16.

"I believe the IoT business can last for at least the next 10 years. Hence, the managed value-added services will be the real future of REDtone's growth," Wei said, expecting the IoT business segment to contribute at least 5% of its bottom line in the next three years.

"IoT is set to enhance the way we live and work, and in time to come, many things will somehow be connected to the Internet," Wei told the press after launching the group's first IoT application called ‘CitiAct’ and its portal ‘CitiSense’ here yesterday.

CitiAct is a smart city citizen engagement application targeted at citizens and local councils. It helps the public to lodge reports to authorities and track the issues sent, while enabling the authorities to respond effectively.

Under the application, users can lodge complaints regarding community issues such as potholes, flash floods, crime, illegal parking and landslides to respective authorities.

On the CitiSense portal, Wei said it provides better insights into one’s connected assets, business, and environment as it captures all the data received from CitiAct and collates them into the relevant statistics, be it on crime or community issues.

“The group wants citizens to take part in making the city and the world a better and safer place to live in. Furthermore, the app can help authorities save time and resources," he said.

Wei said CitiAct was available for download for free via Google Play for Androids and Apple App Store for iOS devices from yesterday. REDtone is targeting some 100,000 users this month.

The app is free for the public, but local councils are charged a “reasonable” subscription fee, said Wei, though REDtone is offering a one-month free trial to the 151 local councils nationwide.

Going forward, Wei said the group plans to expand their IoT footprints to Asean countries in the next 12 months.

Shares in REDtone (fundamental: 1.8; valuation: 1.1) closed at 71 sen yesterday, down half a sen or 0.7%, for a market capitalisation of RM534.89 million.

The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.

This article first appeared in digitaledge Daily, on August 5, 2015.