TKS eyeing fresh revenue opportunities
T.K.S. Technologies Plc (TKS), a pioneer in security printing solutions, has vowed to forge ahead with its plan to expand its tech ecosystem, including exploring new revenue sources through acquisitions.
The company allocated 800 million baht to inorganic growth investment last year.
The firm aims to acquire another 21% stake in SET-listed computer system integrator Advanced Information Technology (AIT) for 2.1 billion baht, increasing its shareholding to 22.4%.
TKS, which is the largest shareholder of IT distributor Synnex (Thailand) Plc with a 38.5% stake, also vowed to pursue deeper synergy with Synnex to drive its IT ecosystem.
“We are moving towards a tech ecosystem builder and preparing for disruptions by expanding into new high growth areas. The move would also complement the firm’s core business of security printing,” said Jutiphan Mongkolsuthree, chief executive of TKS.
TKS is pursuing inorganic growth through new business areas that support digital transformation. It took a 58% stake in Gofive, a provider of customer relationship management (CRM) solutions and a 5.16% stake in SET-listed vending and billing machine operator Sabuy Technology.
It also invested in 5% of the shares of IT product distributor Metro Systems Corporation (MSC) Plc and founded Next Ventures, a corporate venture capital that invested in startups, including food packaging solutions e-commerce platform Dezpax.
Mr Jutiphan said the investment in AIT would enable TKS to expand its reach to large projects and gain a greater share of profit.
He said TKS now has a 1.44% stake in AIT, which has a backlog of 7.4 billion baht. The deal, which involves the acquisition of another 21% stake in AIT, is set to be approved at the board’s meeting next month.
“During the pandemic, our stock valuation was 40% lower than the real business as investors were only aware of our printing business,” said Mr Jutiphan. “We are now transforming our business and right now we still see a valuation that is 20% lower than the reality.”
In the third quarter, the firm’s revenue reached 1.4 billion baht with a net profit of 602 million baht and profit margin of 41.8%.
Some 80% of the firm’s revenue is now from new investments with the printing business generating the other 20%, said Mr Jutiphan. The proportion of revenue from new investments would rise to 90%, he said.
“The printing business will benefit from the upcoming election,” he added.
Suthida Mongkolsuthree, chief executive of Synnex (Thailand), said the firm will work closely with TKS to tap into large projects secured by MSC and AIT, as the firm previously mainly supplied small and medium-sized enterprises (SMEs).
Synnex’s revenue in 2022 was expected to reach a new high of more than 40 billion baht. In the first nine months of last year, the firm booked 29 billion baht in revenue.
She said the business-to-business segment accounted for 20% of the firm’s revenue last year and the share of its service business was less than 10%.
In 2023, the company aims to see a double-digit revenue growth thanks to business diversification and ecosystem expansion, she said.
The country’s reopening is expected to drive the firm’s revenue this year
The firm expects to see at least one major investment deal this year, Ms Suthida said.