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Scicom 1Q profit up 24% on higher billings (Edge Financial Daily - 2016)

08 Nov 2016 (Tue)

KUALA LUMPUR: Scicom (MSC) Bhd recorded a 23.6% year-on-year (y-o-y) jump in net profit to RM11.9 million for the first quarter ended Sept 30, 2016 (1QFY17), mainly driven by higher billings from its business process outsourcing (BPO) segment. Likewise, revenue rose 16.3% y-o-y to RM52.1 million, from RM44.8 million in the corresponding quarter last year.

Revenue showed a slight 3.03% quarter-on-quarter (q-o-q) decline from RM53.7 million, but net profit rose 8.16% q-o-q, up from RM11.1 million.

Scicom declared a first interim dividend of two sen, payable on Dec 7.

The BPO segment, which has consistently contributed over 90% of Scicom’s revenue, booked RM15.5 million in profit before tax (PBT). This marks a 32.48% y-o-y improvement from the RM11.7 million PBT recorded for the corresponding period last year. The segment’s performance offset RM1.03 million in losses before tax incurred by the education segment in the same period, an increase of 23.38% y-o-y.

“We see emerging markets as an opportunity [for Scicom],” its group executive director and chief executive officer Datuk Leo Ariyanayakam told reporters after the group’s annual general meeting yesterday.

“Most multinationals that compete with us are scared to go into emerging markets because they don’t know how those markets react,” he said.

According to Ariyanayakam, Scicom has set its sights on expanding into e-government services in emerging markets, such as Nepal, Cambodia and Laos.

“There are more opportunities in these markets because we think they are constrained in terms of budgets, and we are very cost-competitive,” he said, adding that the group is gaining some traction in Cambodia.

“The response from emerging markets has been very encouraging, especially in government sectors. It’s a process of educating [clients] and making sure we’re providing value for money. It takes time, but it’s lucrative,” he said.

Although there is still room for Scicom in the Malaysian market, Ariyanayakam added that the local scene is very competitive — it is relatively easier for the group to venture outside.

“The interesting side is that Malaysia is a natural draw for multinationals that are based in Asia-Pacific for BPO services, so we’re always involved in a tender with a multinational,” he said, adding that Malaysia had been a springboard for the company.

Scicom recently became the call centre provider for SriLankan Airlines, according to reports by Sri Lankan media, and is on track to become the largest BPO provider in the South Asian country by March 2017, according to Ariyanayakam.

For FY16 ended June 30, 2016, 0.7% of the group’s revenue came from Sri Lanka. By country, the biggest contributors of revenue are Malaysia (55.4%) and the Philippines (32.1%).

On a separate note, the group’s wholly-owned subsidiary Scicom E Solutions Sdn Bhd is now entitled to a 10-year tax exemption after securing its Multimedia Super Corridor status earlier last month.

By Samantha Ho / The Edge Financial Daily  | November 8, 2016 : 9:56 AM MYT