Eduspec expanding overseas footprint

SHAH ALAM: Education player Eduspec Holdings Bhd is looking to expand its overseas presence to further prop up its earnings growth, according to its CEO Lim Een Hong (pix).
Last year, the overseas markets contributed over 30% to the group's top line. Going forward, he expects overseas contribution to increase in tandem with its expansion plan.
"The next few years we'll focus in Asean countries before we talk about Asia, that's why we choose countries like Indonesia, Philippines and Vietnam, then Thailand and Myanmar," Lim told SunBiz in a recent interview.
However, he said the company hasn't commenced operations in Myanmar and Thailand as it is still negotiating with its partners.
"We must be careful when going in to the overseas markets to make sure that the landscape and partners are correct," he stressed.
Eduspec is the provider of IT literacy materials for primary and secondary schools.
"We're still new in overseas business, but we see a lot of growth because this concept is very well received by many countries, especially in Indonesia as the schools (have their own spending, giving us more leverage).
"In different countries, sometime the need is different, so we go in there to understand the need and we design what kind of solutions to use and after that help them to implement the solution," Lim noted.
Eduspec's net profit jumped eight fold to RM6.85 million for the financial year ended September 30, 2014 compared with RM854,000 it made a year ago. For six months ended March 31, 2015, it posted a widened net loss of RM5.72 million against RM3.31 million in the previous corresponding period.
Lim said it is usual for Eduspec to incur losses for the first quarter due to the October-December school break period.
"Some how overseas cycle will help us to balance it out, but some how in the last two months, nobody doing anything," he explained.
Lim is confident however, that the company will post better results for the financial year ending September 30, 2015.
"In the education sector, it takes longer time for a certain solution or product to mature, but we're starting to reap fruits from what we've done over the past few years.
"Our business model (complements) schools, wherein most of the schools come back to us as (repeat customers), that's our strength," he noted.
At present, Lim said Eduspec still has to incur higher operating costs due to its expansion plans and developments, but he believes the K-12 (kindergarten to year-12 of school education) segment will offer more opportunities for the company as it always a neglected area within the education industry.
"We're selling a service model, we don't ask you to buy hardware, but we tell you what its used for and how to use it as well as how to measure the return on investment, so that your money is well spent…A big part of our role is to help the schools to upgrade and build their human capacity," he added.
"We don't intend to do the China market as yet because it's very tough and difficult to find the right partner.
Lim said Eduspec is not looking at any fund raising exercise in the near term following a private placement which raised up to RM35 million last year.
"In fact, there is a lot of pressure for us to enlarge (the share base), so that somebody can invest, there are interests in our counter especially for funds because they have never seen a company that is building the K-12 market, (whereas) many are chasing the university market," he pointed out.
Lim said Eduspec will not embark on any mergers and acquisitions (M&As) despite being approached by overseas parties and will focus more on organic growth over the next three years.
"We've no intention (for M&As), that's not in our plan, because we have potential to grow to certain value first, we're still at infancy stage," he added.