DNeX sees earnings boost from consolidation

DNeX will continue to pursue opportunities in digitalisation among the public and private sectors in the country


DAGANG NeXchange Bhd (DNeX) expects the group financial performance moving forward will improve with the consolidation of financial results from Ping Petroleum Ltd and SilTerra Malaysia Sdn Bhd.

Group MD Tan Sri Syed Zainal Abidin Syed Mohamed Tahir (picture) said with the oil price currently hovering above US$70 (RM295) per barrel, coupled with its enlarged shareholding of 90% in Ping, he foresees a significant improvement in revenue and profit contribution from Ping moving forward.

“There is opportunity to further improve Ping’s production output by rejuvenating existing wells to monetise economically attractive reserves in the Anasuria Cluster.

“We are also looking into acquiring additional late cycle producing target markets as the North Sea, Malaysia and within the region as well,” he told The Malaysian Reserve.

On June 30, DNeX equity stake in Ping rose to 90%, following the completion of the acquisition for an additional 60% stake in the upstream oil and gas player, valued at US$78 million.

DNeX recorded a total revenue of RM284.6 million for the cumulative 15-month period ended March 31, 2021.

Of that, the information technology and e-services segment represented RM197.8 million or 69.5%, whereas the energy segment contributed the balance RM86.8 million or 30.5%.

As at Ping’s latest financial year ended Dec 31, 2020 (FY20), Ping recorded a total profit after tax of RM9.3 million on the back of RM142.4 million in revenue.

He said Ping had managed to stay profitable and generated positive operating cashflows during the year.

“In relation to SilTerra, given the bullish outlook for the semiconductor sector today, where demand firmly outstrips supply and is expected to persist up to 2024, we are confident our business in the semiconductor market will grow at a strong pace.

“The growing adoption of technology such as the Internet of Things, 5G, artificial intelligence and electric vehicles will continue to drive up demand for chips,” Syed Zainal Abidin noted.

He added that the group has received a three-year contract extension for the National Single Window for Trade Facilitation concession up until 2024 which will continue to provide positive earnings.

“It is expected to be a key contributor to our financial performance in our trade facilitation segment moving forward, contributing a revenue of about RM100 million a year,” he said.

The contract extension also serves as a testament to DNeX’s strength and capabilities as a leading e-services provider in trade facilitation.

DNeX will continue to pursue opportunities in digitalisation among the public and private sectors in the country, he added.

DNeX has secured a three-year contract with further three-year option for extension to supply installation and maintenance support services of submarine cable communications with PT Infrastruktur Telekomunikasi Indonesia (TelkomInfra).

Under the agreement, TelkomInfra will pay a standby charge of 213 billion rupiah (RM63 million) over the initial three-year period, excluding daily rates applicable depending on the work scope.

“With an assumption of 65% vessel utilisation rate in a year, estimated total revenue per year, including standby charge, is about 215 billion rupiah.

“Thus, revenue for the initial three years of contract can reach up to RM186 million, and RM372 million with the additional three-year option,” he added.

On DNeX plans to raise RM642 million, Syed Zainal Abidin said the duration of the timeframe for the implementation of this exercise hinges on the take-up rate of the group’s placement shares.

The exercise may be implemented in multiple tranches within six months from the date of approval of Bursa Securities or any extended period as may be approved by Bursa Securities, he explained.

“The reason we opt for private placement is because it allows DNeX to bring in strategic investors which we can leverage for their track record and capabilities, to add value to our business and fuel our future growth. This can benefit minority shareholders in the long run,” he reckoned.