GDEX to diversify into IT services and solutions

Company to expand offerings to wider range of clients

“The investments in Web Bytes, Sweetmag and Anon Security provide the group with an entryway into the IT services and solutions business.” GDEX Bhd

GDEX Bhd is proposing to undertake a diversification of its existing principal activities to include information technology (IT) services and solutions.

In a filing with Bursa Malaysia, the company said it had primarily relied on its core express delivery business, which consistently accounted for over 85% of total revenue for the three years up to its financial year 2023 (FY23).

“The group’s recent loss-making position was mainly attributed to the express delivery business being impacted by high competition from foreign courier companies.”

In an effort to turnaround the business, the company said it had launched the GDEX 2.0 transformation plan in 2022.

“The aim is to leverage technology to deliver a better customer experience and expand its service offerings in the IT sector to a wider range of customers, from small companies to large multinationals.”

As a starting point, GDEX said it had acquired equity stakes in three IT companies in 2022, namely Web Bytes Sdn Bhd, Sweetmag Solutions (M) Sdn Bhd and Anon Security Sdn Bhd, in which it has a 38%, 51% and 60% stake, respectively.

GDEX noted that its express delivery business has faced challenges and registered losses in recent financial years.

“The investments in Web Bytes, Sweetmag and Anon Security provide the group with an entryway into the IT services and solutions business, including the provision of ecommerce and website development, business software solutions and cyber security consulting,” it said.

GDEX noted that the three subsidiaries have been in operation for years and have established their own customer base, ranging from individuals to governments, corporations and international brands across South-east Asia.

“Notwithstanding its loss-making position for FY23, the IT services and solutions business is expected to turn around, moving forward, in conjunction with the scaling up of its services and operations.

“Furthermore, the group can leverage the competency and experience of the key management personnel identified to spearhead the IT services and solutions business and improve the prospects of undertaking the proposed diversification effectively.”

GDEX noted that the IT industry is one of the few sectors that has seen strong growth since the pandemic.

“In 2021, IT contributed 23.2% to Malaysia’s gross domestic product and is projected to rise to 25.5% by 2025. The government and private sector in Malaysia are in the process of embracing a country-wide digital transformation.

“The digitalisation of operations across all major industrial sectors will be a decisive factor in securing Malaysia’s role in the future global economy.”

To support this nationwide vision, GDEX noted that the government had launched the Mydigital initiative as part of the country’s digital economy blueprint.

“This initiative is part of the government’s plans to transform Malaysia into a digitally-driven, high-income nation and a regional leader in the digital economy by 2030.

“Through the government’s cloud first strategy under the Mydigital blueprint, Malaysia looks to enhance its capabilities as a regional data hub, welcoming investment in data centres.”

In light of the industry outlook for the IT sector and barring any unforeseen circumstances, GDEX said its board is cautiously optimistic about the prospects of both the group as well as the IT and solutions businesses.