Dataprep: Tough times for IT market

KUALA LUMPUR: Loss-making Dataprep Holdings Bhd aims to make a profit in the near future by securing more IT deals and containing costs, but noted that this financial year ending March 31, 2017 (FY17) is “not going to be much better than FY16” with the IT market still going through tough times.
Acting CEO and COO Tan Hock Chye said for FY17, the group will try to do its utmost in ensuring that its core business is maintained, but remains uncertain whether the group will be able to break even this year.
The group, which has been incurring losses since FY08, is principally engaged in the provision and marketing of ICT-related products, solutions and services as well as payment solutions and services. For the first nine months of FY16, Dataprep saw a net loss of RM1.62 million.
“We’re trying to rationalise our financial position. The IT market is tough today. We’ll try to ensure that our losses are capped, with a view that we hope to make a profit in the near future,” Tan told reporters after its EGM here yesterday.
Moving forward, he said the group aims to return to the black, but this would depend on the economic situation.
Given the current weak market sentiment, the group is focusing on its core business and endeavour to secure higher margin ICT projects, which are mainly solutions and services, to sustain the operational costs of the group. Tan pointed out that the main challenge was due to the cutback in IT expenditure in both public and private sectors. Half of the group’s business is from the public sector while the remaining half is from the private sector.
“In today’s environment, wherever there are IT opportunities in whatever sectors, we will try to take part. We’re 45 years old this year. “If the ringgit is better, the sentiment is much better. A lot of companies may then think to improve their IT infrastructure and IT facilities, so it will create more IT opportunities,” said Tan.
He said given the challenging IT landscape, the group is also exploring opportunities for diversification, but noted that there is none yet.
The group has also downsized its number of workforce to 300 today, compared with 500 a decade ago.
About 95% of Dataprep’s business is from Malaysia while 5% is overseas, mostly in China. On expanding overseas, Tan said the group has been looking out but has not found anything solid yet. It has offices in Singapore, Hong Kong and China.
At the EGM earlier, shareholders approved its proposed reduction of the share premium account, par value reduction as well as private placement to raise RM7.09 million.
“Our major shareholder is VXL Holdings Sdn Bhd. Even though market is tough, we’ve done a private placement to our major shareholder, an indication of a good sign that we continue to get their support and expertise,” said Tan.
VXL through its subsidiaries provides communication and technology, property development and tourism development services in Malaysia, Hong Kong and China. Dataprep counts Datuk Lim Chee Wah, the son of Genting group founder and tycoon Tan Sri Lim Goh Tong, as one of its directors.