KUALA LUMPUR (Dec 30): Loss-making asset tracking and supply chain management solutions provider SMTrack Bhd does not expect to turn profitable anytime soon, as the group is in the midst of organisational restructuring, following several boardroom changes which began this year.
 
“Many things are going on at the moment. You will not be able to see changes happening immediately. These things will take time,” executive director Chang Chee Ching told reporters after the group’s annual general meeting (AGM) today.
 
For the first quarter ended Oct 31, 2016 (1QFY17), SMTrack reported a net loss of RM272,000 versus a net profit of RM514,000 a year earlier. Revenue rose 226.7% to RM611,000, from RM187,000.
 
In the 16-month period from April 2015 to July 2016, the group made a net loss of RM11.48 million. The group blamed the losses made over the years, mainly on higher administration costs and impairment losses.
 
SMTrack saw several changes, notably in its board of directors, beginning January 2016.
 
Additionally, it appointed Messrs KC Chia & Noor as its new auditor in October, following the resignation of former auditor Messrs Baker Tilly Monteiro Heng in August.
 
Nevertheless, SMTrack hopes to return to the black by end-2017, banking on its information technology business — whereby the radio-frequency Identification (RFID) technology is its main forte — as well as the construction segment.
 
“We are developing new systems and [implementing] new solutions, which can be used by all industries especially those depending heavily on [data collection],” said executive chairman Anuar Hanadzlah, who added that the group sees a huge potential in RFID solution for the Internet of Things (IoT) market.
 
SMTrack had in March this year, formed a joint venture with Cherish Words Sdn Bhd for the execution of sub-contracting work to design and build residential homes for the Federal Land Development Authority (Felda) in Felda Palong 16, along Pahang and Negeri Sembilan.
 
According to Chang, the project is now “60% complete and expects to generate income by mid-2017”, amidst economic slowdown, as well as slowdown in the property industry.
 
Though the project kicked off earlier this year, SMTrack is expecting to recognise income from the project only by mid-2017, as it is awaiting payments from Felda.
 
Clarifying on the matter, Chang said due to a variation order in the project, the group was required to cater to “changes in the design and plans”, and will only be paid once the project is fully delivered.
 
The group also revealed that it is planning to establish a construction arm, specifically for future government property and infrastructure projects. When asked further, Chang said the group would eventually need to set up a new subsidiary for this.
 
On developments in plans to acquire US-based Wellspring Worldwide Ltd which is the global master licensor of several food and beverage (F&B) brands, including Tutti Frutti Frozen Yogurt, the group said discussions are now in the “advanced stage” and expects to make an announcement in two weeks.
 
“If everything goes well, we might see most of our income coming from the [F&B business] as we are aiming for foreign markets. In saying so, we might see a change in business direction in the future,” Chang said.
 
“We are not moving away from the tech sector but looking at our [financial statements], our revenues have not been very strong. For everyone’s sake, especially of our shareholders, we want to be a company that is profitable in the long run,” he added.
 
SMTrack’s shares jumped 80% today to close at 5 sen, for a market capitalisation of RM15.6 million.