Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on February 26, 2020

KUALA LUMPUR: Kronologi Asia Bhd, an ACE Market-listed on-site and off-site enterprise data management and data storage solutions firm, is leveraging opportunities it sees amid challenges like the prolonged Hong Kong protests and US-China trade tensions as well as the more recent Covid-19 outbreak.

Such incidents have led to higher video surveillance requirements and heavier streaming of video broadcasts, which bode well for the group’s business, according to its chief executive officer Edmond Tay Nam Hiong. In particular, with the viral outbreak, there has been increased use of technology such as genomics data in handling the disease and to seek a potential vaccine for the virus, which has propped up demand for unstructured data, or data that is video or video-like. All these led to more purchases of its solutions by customers, Tay told reporters during a video conference call yesterday on its latest financial results.

“I think the situation (the external environment) is [always] evolving. Before the virus [outbreak], we had the protests in Hong Kong and the US-China trade war, yet we continued to experience growth — as demonstrated by our numbers.

“The way we look at this (the present situation) is that it is both a danger and an opportunity for us. As long as the virus is kept in control and does not blow up into a worldwide pandemic, I think it is also an opportunity for us. The fortunate thing for us is that the industry that we are in is fairly unique,” he added. Kronologi has a diversified customer base not just in Malaysia but across other Asian countries — like Singapore, the Philippines, China (Hong Kong and Taiwan) and India — comprising airports, airlines, port operators, food and beverage companies, banks, financial institutions, stock exchanges, smart cities, government agencies as well as telecommunications, media and broadcasting companies.

Kronologi recorded a 14% year-on-year (y-o-y) rise in net profit to RM18.57 million for the financial year ended Dec 31, 2019 (FY19), from RM16.26 million previously, as revenue jumped 44% to a record high of RM235.5 million from RM163.07 million.

It attributed the increased earnings to its recent acquisition, Sandz Solutions (Singapore) Pte Ltd, and a higher contribution from its operations in India. It also noted, however, that it incurred higher interest, depreciation and tax expenses in FY18.

The stronger FY19 profit came despite a 35% y-o-y drop in the group’s fourth-quarter net profit to RM3.04 million, from RM4.68 million, mainly due to lower margins, higher interest expenses and depreciation due to geographical expansion despite revenue growing 65.3% to RM69.27 million from RM41.9 million.

“In 2019, there wasn’t any project that was impacted. However, we did face margin stress due to the allocation of tighter budgets by customers as they had to spend elsewhere to handle the [impact arising from the] trade war and protests — and now the virus outbreak.

“If it does not become a full-blown pandemic, I think this is a short-term impact on the economy. I think the kind of business we are in will not feel a direct impact. We are cautiously optimistic that we will still experience growth this year — of the same magnitude as seen in FY19,” Tay added.

Shares in Kronologi settled 5.5 sen or 6.71% lower at 76.5 sen yesterday. The stock has risen over 50% since last May to now bring it a market value of RM374.3 million.

 

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