KUALA LUMPUR (Aug 18): Kronologi Asia Bhd is expecting an upturn in its business performance in the second half of its financial year 2020 (2HFY20) ending Jan 31, 2021, driven mainly by the resumption of business activities following the pandemic-induced disruptions in the first half.

"The pandemic has [taken] a toll on the economy and businesses, with a lot of companies reporting losses. But we managed to report a profit in the second quarter (2QFY20). Now, we are moving into the third quarter and business activities are resuming. I think the second half will perform better than the first half," its chief executive officer Edmond Tay Nam Hiong said during a videoconference briefing today on the group's latest financial results.

This is based on the group's strong customer base, Tay said, which will enable the group to push for better performance after the Covid-19 disruptions and see sequential growth for the remainder of FY2020.

The ACE Market-listed enterprise data management and storage solutions firm swung into the red in 1HFY20 with a net loss of RM10 million — dragged by an RM11.64 million one-time non-cash impairment to property plant and equipment incurred during 1QFY20 — versus a net profit of RM8.75 million for 1HFY19, despite revenue increasing 10.23% to RM93.23 million from RM84.57 million a year ago.

Tay said the group does not expect any further major impairment to be made in FY20. He also explained that the group would have been in a net profit position for 1HFY20 if not for the impairment in the first quarter.

In the second quarter ended June 30, 2020 (2QFY20), the group reported a net profit of RM1.24 million, though it was down 75.51% year-on-year (y-o-y) from RM5.06 million in in 2QFY19.

During the quarter, the group's profit from operations doubled to RM2.16 million in 2QFY20 compared with RM1 million in 1QFY20. This was despite revenue for 2QFY20 declining 20.77% y-o-y to RM41.26 million from RM52.07 million, and down 20.61% quarter-on-quarter from RM51.97 milion.

"The latest results demonstrated our efficacy and power of our pay-per-use and subscription-based model. It is a clear demonstration that customers like it [without the need to fork out huge capex to invest during this challenging period] and it is very effective to get into the market with such a business model. This has resulted in us reporting a profit in the second quarter," Tay said.

He added that the group has a diversified geography portfolio, which helped the group cushion the pandemic's negative impact. Besides Malaysia, the group has operations in Singapore and Hong Kong.

At 3.18pm, Kronologi's share price was trading half a sen or 0.9% higher at 58 sen, valuing it at RM306 million. It saw some 10.15 million shares traded.

The counter, which sank to as low as 34 sen on March 19, has rebounded some 70% since. However, it is still down 22.7% year-to-date, from when it was trading at 75 sen.