DNeX aims to double profit, revenue by 2017

KUALA LUMPUR: Dagang NeXchange Bhd (DNeX) expects to double its profit and revenue by 2017 when it completes its diversification into the energy business, up from a net profit of RM11.2 million and revenue of RM95.5 million posted in the financial year ended Dec 31, 2015 (FY15).
Group managing director Zainal Abidin Jalil said the big jump in revenue growth is going to be driven by the energy business, as the additional revenue stream from the energy acquisitions will contribute to DNeX’s growth potential and earnings resiliency over the medium to long term.
“While we double the revenue, we believe we can also more than double our profit when we complete the energy transformation, as well as with the contribution from IT,” he told a press conference after the group’s AGM here yesterday.
DNeX’s revenue composition between its IT and energy division is projected to be equal (50:50) by 2017. In FY15, revenue from IT contributed 97% to the group’s revenue.
“Once the acquisitions of OGPC Group and Ping Petroleum are completed, we expect the revenue composition between the two divisions to be more balanced,” Zainal said.
In its diversification into the energy sector, the group is executing a strategy of anchoring the business on a know-how heavy and asset light business model to achieve commercially sustainable long-term growth.
Shareholders had approved DNeX’s proposed acquisitions of the entire interest in OGPC Sdn Bhd and OGPC O&G Sdn Bhd, collectively known as OGPC Group for RM170 million on Jan 27, 2016. On April 27, 2016, shareholders approved DNeX’s US$10 million acquisition, through wholly-owned subsidiary DNeX Petroleum Sdn Bhd, of a 30% stake in Ping Petroleum Ltd. Both acquisitions are expected to be completed in the third quarter of 2016.
“DNeX Petroleum is the only business that is somewhat exposed to the crude oil price volatility, because it is in the upstream business. We will focus on the things we can control, which is to manage our cost structure,” said Zainal.
He said while the group is keen to pursue the energy transformation, IT remains its core business.
“We’ve been scaling up our IT business, generating new business like the Global Halal Exchange eMarketplace and pursuing opportunities that leverage on our core competencies in trade facilitation.”
In IT, it is also looking to diversify into other business like systems integrator and security services.