RGB still keen on acquiring stake in Timor Holdings

KUALA LUMPUR: Penang-based electronic gaming and amusement machines manufacturer RGB International Bhd, which is confident of achieving a sales target of 1,500 machines for 2015, is still interested in acquiring a stake in Timor Holdings Lda in order to gain a strong foothold in Timor-Leste.

Currently, RGB’s presence in Timor-Leste is through a concession of machines with Timor Holdings but it is focusing on distributing gaming machines in the country.

During an analysts briefing yesterday, RGB executive director Mazlan Ismail said the company will review the acquisition plan “when the time is right”.

To recap, RGB’s planned acquisition of a 30% stake in Timor Holdings fell through in July as Timor Holdings was unable to obtain the relevant gaming licence from the authorities. The acquisition would have given RGB a foothold in Timor-Leste’s gaming industry.

“We’re confident that eventually it will come through, just give us some time,” he added.

RGB COO Steven Lim (pix), who is one of the directors of Timor Holdings, said RGB is on track to achieve its sales target of 1,500 machines this year despite a moderate sales performance of only 387 machines sold for the first half of the year.

He explained that there are about 300 machines that are on trial at the moment, which are expected to be converted into actual sales in the second half.

“Definitely we’ll register better sales in the second half than first half,” he said.

Last year, RGB sold a total of 1,452 machines, translating into RM143.16 million in revenue under the sales and marketing division.
For the six months ended June 30, 2015, it reported a 17.66% increase in net profit to RM10.89 million against RM9.25 million in the same period last year. Its earnings jumped threefold from RM5.97 million to RM18.16 million in 2014.

Besides the sales and marketing division, the company is also involved in technical support and the management segment, providing machine concession programmes on a profit-sharing basis. The segment recorded a revenue of RM70.93 million last year.

It is targeting 7,000 concession machines in existing and new markets for 2015, with 6,488 machines registered in the first half of the year. RGB, which has a budgeted annual capital expenditure of US$5 million to US$8 million (RM21.05 million to RM33.7 million), has a presence in countries like Malaysia, China (Macau), Cambodia, the Philippines, Laos and Nepal.

Lim said the company will continue to focus on penetrating emerging markets, such as Nepal and Sri Lanka. as it still does not have sufficient capacity to compete with the big players.

“We’re talking to operators there (Nepal) to work more on strategic partnerships. It’s our strength to explore emerging markets,” he added.

While the company is a beneficiary of the weakening ringgit, Lim noted that the net forex gain from overseas operating markets has come down by 50% as earnings in the Thai baht and Philippine peso have to be converted into US dollars and then into ringgit for account consolidation.