Dagang NeXchange Berhad (“DNeX”) has announced its results for the third quarter ended 30 September 2020 (“3Q FY2020”), and the nine months period ended 30 September 2020 (“9M FY2020”).
During the quarter under review, DNeX’s revenue stood at RM50.5 million as compared to RM62.0 million in the previous year’s corresponding period (“3Q FY2019”). The softer performance was mainly due to spill over effects from the Movement Control Order earlier this year.
Revenue from IT segment eased to RM32.5 million in 3Q2020 from RM45.1 million last year, on the back of lower progress billing due to slowdown on project implementations, and the absence of contribution from a one-off submarine cable laying and maintenance contract completed in the third quarter last year. Lesser trade transactions have also impacted revenue for trade facilitation & e-Commerce business. On the other hand, the Energy segment recorded a 6.3 per cent increase in revenue to RM18.0 million from RM16.9 million in 3Q FY2019.
The IT division remained the anchor revenue contributor to the Group, representing 64 per cent of the Group’s 3Q FY2020 revenue while the remaining 36 per cent was from the Energy division.
In 3Q FY2020, the Group incurred a one-off non-cash impairment loss totalling RM4.6 million. Subsequently, the Group registered a lower profit after tax and non-controlling interest (“PATNCI” or “Net profit”) of RM3.9 million in 3Q FY2020.
For the nine-month period, the Group registered revenue of RM176.2 million and net loss of RM14.0 million. The weaker performance was mainly impacted by operational disruptions in first half of the year and the recognition of one-off non-cash impairment loss totalling RM35.9 million. Excluding the one-off items, DNeX managed to post an operating profit of RM12.7 million in 9M FY2020 despite the unprecedented business landscape.
“Our focus in the third quarter was to accelerate the recovery progress and execute cost optimisation activities to strengthen the Group’s foothold. While there are more to be done, we are pleased to note that our efforts are gradually coming to fruition as seen in our improved operating profit in 3Q FY2020,” said Dato’ Sri Syed Zainal Abidin Syed Mohamed Tahir, Group Managing Director of DNeX.
“Another notable development is the upward trend recorded in transaction volume from our largest revenue contributor, trade facilitation & e-Commerce business. The improvement signifies recovery in trade activities and the domestic economic condition. We believe the current market offers robust growth opportunities for DNeX as the public and private sectors are accelerating their digitalisation plans, especially in a Covid-19 pandemic reality when physical movements and physical contact are restricted,” he said.
He said the company is well positioned as the digital trade facilitation partner for businesses and Government agencies towards improvements and efficiency in trade processes as well as ease of doing business in the country.
The Group, he said, is especially looking at the small and medium enterprises (“SMEs”) segment in pushing adoption of digitalisation in their trade process aimed at helping SMEs stay competitive and sustainable.
In the Energy segment, the company is looking to strengthen its business in servicing the oil and gas industry as well as completing a heads of agreement to enter the upstream sector to capitalise on capturing attractive producing brownfield assets that have become available under current market conditions.