PU C Founder confident of sustaining profit for rest of 2014

by **Cals** Mon 18 Aug 2014, 09:18

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Monday, 18 August 2014 09:07

KUALA LUMPUR: PUC Founder (MSC) Bhd, an ACE Market-listed fingerprinting security system developer, expects to maintain its profit momentum in the remaining three quarters of its financial year ending Dec 31, 2014 (FY14).

For its first financial quarter ended March 31, 2014 (1QFY14), it reported a record net profit of RM3.63 million compared with RM474,000 a year ago. Revenue tripled to RM16.58 million from RM5.41 million in 1QFY13. It is due to release its 2QFY14 results this month.

The group had attributed the strong 1QFY14 results to the consolidation of additional earnings from London’s AIM Market-listed Resource Holding Management Ltd following the completion of its reverse takeover (RTO) of PUC Founder in January.

PUC Founder managing director (MD) Cheong Chia Chieh said the new businesses in the enlarged group would be able to sustain its financial performance for the rest of the year.

Its core businesses now encompass media and advertising, its biometrics division, and electronic payment solutions and financial services.

Cheong, who was formerly group MD of Resource Holding, said PUC Founder, which had embarked on a restructuring exercise to dispose of non-core entities, targets to complete it by the first quarter of next year.

“We want to offload the ‘baggage’ to move forward,” he said in an interview with The Edge Financial Daily.

The group is in the process of disposing of some of its dormant subsidiaries, he said.

“Before the merger exercise, we had about 14 companies and after the merging exercise we now have over 21 entities,” he added.

PUC Founder had commenced the winding-up of its wholly-owned subsidiary RH Marketing (GZ) Ltd, a filing with Bursa Malaysia on July 24 showed.

As of Friday’s closing price of 24 sen, PUC Founder’s market capitalisation stood at RM202.8 million.

“We are still a small company and we don’t need so many subsidiaries. The fewer subsidiaries the better,” said Cheong.

Under the RTO involving Resource Holding, Cheong had injected the entire stake of its core unit Red Media Asia Ltd Group into PUC Founder for RM90 million in exchange for 750 million new PUC Founder shares at 12 sen per share.

“PUC Founder’s share price is now double that of the issue price. The market has given us a lot of confidence,” said Cheong. Year-to-date, however, the stock has dropped by 2.04%.

Going forward, PUC Founder plans to diversify into the solar energy business to help boost its recurring income base by setting up its first solar plant in Malaysia to participate in the Feed-in-Tariff (FiT) programme.

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Cheong said core businesses now encompass media and advertising, biometrics, and electronic payment solutions and financial services.

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“We plan to enter the solar market, but much depends on the opportunity. We have to quickly get ready for the next round of bidding at the end of the year [to participate in the FiT programme],” said Cheong.

It has been reported that the solar energy business can potentially yield an internal rate of return of as high as 15%.

Cheong added that each solar PV company would need an indicative cost of RM10 million for each one megawatt allocated by TNB.

Given that its net gearing ratio would drop to 0.11 times after a proposed issue of new securities, he said the group can afford to raise its gearing ratio for the solar plant project.

In a filing with Bursa Malaysia last month, PUC Founder had proposed a private placement of 845 million new shares to raise to RM15.63 million at an indicative price of 18.5 sen. Out of these proceeds, RM11.33 million are slated to be invested in building a solar power plant in a possible joint venture with other partie

This article first appeared in The Edge Financial Daily, on August 18, 2014.
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