DGSB eyes 15% more revenue in FY16

KUALA LUMPUR: Diversified Gateway Solutions Bhd (DGSB) expects its two new businesses, digital media and tower infrastructure, to contribute 10-15% of its revenue in the financial year ending March 31, 2016 (FY16).

“We’ve diversified into these two areas last year. Hopefully it will contribute positively,” its CFO Richard Voon told SunBiz after the group’s AGM here.

Its digital media projects include the design, supply, installation, commissioning and maintenance of indoor media solutions.

In FY15, its wholly-owned subsidiary Diversified Gateway Bhd (DGB) was awarded a major contract by a key concession holder for the deployment of 3,000 digital media screens. The project will be rolled out in two phases during this calendar year.

Its tower projects are design, fabrication, commissioning and installation of transmission towers for telco providers. The provision of telecommunications towers is a growing market due to the advent of 4G technology, which requires extended and higher specification network coverage. The government’s initiatives to expand fibre broadband coverage into rural areas are a further growth opportunity.

Digital media and tower infrastructure are part of the group’s digital and infrastructure services segment, which constitutes 62% of the group’s revenue in FY15. Its business performance services segment contributes 38% and the remainder comes from the trading and distribution services segment.

Voon said digital media did not contribute much last year but will generate some elements of recurring income through operational and maintenance streams, whereas tower contracts contributed about a third of the group’s revenue in FY15.

The bulk of its revenue is still predominantly from the network and telecommunications business.

The group provides a comprehensive suite of communications network-related services, including network design, installation, maintenance, consultancy, project management and operations management for large carrier and enterprise networks in Malaysia.

“We have an order book of RM44 million for digital and infrastructure services and business performance services that can stretch for six months up to three years. The pipeline is always there,” said Voon.

Commenting on the weakening ringgit, Voon said ACE-Market listed DGSB has hardware and equipment purchases denominated in US dollars but most of these deliverables were done before the ringgit crisis.

“But for the next orders that we receive, we probably need to relook our pricing because some of these projects where procurement is denominated in US dollars had been priced at RM3.60 at that time. With the US dollar now at RM4.20, we may need to review pricing. How significant are these? We don’t know as yet.

“It (pricing) is constantly being looked at. Our pipeline is not static, its fluid. Every potential pipeline that drops in, the team will look at the costing, taking into account elements that involve forex,” said Voon, adding that it also has fallbacks in financial hedging.

The group is also cautiously optimistic of FY16 amid the challenging economic environment.

“We have exposure (to the strengthening US dollar) but it’s manageable,” said DGSB CEO Richard Lau.

He said the group plans to expand to Asean countries for infrastructure jobs but this exercise will take some time. It currently has operations in Thailand and Singapore.