Nova expects order book to sustain earnings for the next 3 years
KUALA LUMPUR: Nova MSC Bhd expects its current order book to sustain its earnings visibility for the next three years.
Following the disposal of its stake in a business unit last week, the Ace Market-listed e-solutions provider has an outstanding order book of RM117mil. This compared with the all-time high figure of RM232mil as of endMarch.
According to Nova MSC chief executive officer Steven Chan, the group will focus on two strategic pillars of digital government services – “smart healthcare” and “digital government” – to drive growth.
In Malaysia, the group is positioning itself to become the market leader in the digital government services segment within the next three to five years, replicating its success in Singapore.
“We are very well-versed in the implementation of the digital government agenda. Supported by our earlier experience and track record that span over 20 years in Singapore and other government agencies globally, we believe we can replicated similar success in Malaysia,” Chan said.
“We see a lot of opportunities here. We estimate the market for digital government ser- vices in Malaysia to be at least 10 times bigger than those of Singapore,” he told a briefing here yesterday.
Nova MSC is in talks with various government agencies in Malaysia to grow its digital government and smart healthcare solutions in the country.
Singapore contributed about 98% to the group’s revenue, driven by the digital government services.
However, Chan said the revenue contribution from other countries would accelerate and increase within the next three years, driven by its “smart healthcare” business.
On that note, revenue contribution to the group from Singapore would likely be reduced to 50%, as contribution from other markets increase.
“This is an ongoing exercise (expanding to other markets). We see tremendous opportunities for us to grow our smart healthcare solutions in markets outside Singapore,” he said.
He pointed out that the group is currently looking at growing its smart healthcare solutions in Malaysia, China, Japan, Australia and the Middle East.
Nova MSC’s customers comprised mainly government agencies in Singapore, Malaysia, Brunei and Saudi Arabia.
Chan said Nova MSC is looking at introducing the pay-per-use model for its digital government and healthcare services in Malaysia.
“This mechanism is expected to bode well with the new Government’s objective to streamline costs related to public services. We are also confident the pay-per-use model, which provides long-term earnings visibility for Nova MSC, will garner traction among government agencies, as the company will bear the system setup costs,” he said.
Nova MSC saw its net loss narrow to RM2.62mil on revenue of RM72.97mil for the financial year ended March 31, compared with a net loss of RM20.43mil on revenue of RM96.81mil in the preceding year.
After two years of losses, Nova MSC expected to return to profitability in the current financial year, supported by its solid order book, potential contract wins, and better cost efficiencies.
Last week, the group disposed of its 51% stake in loss-making subsidiary PrimusTech Pte Ltd to JAG Ltd of Japan for RM8.9mil.
Proceeds from the proposed disposal would be used for the group’s general working capital requirements to support its existing business.