DNeX 3Q net profit rises 25% on higher revenue

by **Cals** Tue 24 Nov 2015, 20:06

DNeX 3Q net profit rises 25% on higher revenue

By Kamarul Anwar / theedgemarkets.com | November 24, 2015 : 12:04 AM MYT

KUALA LUMPUR (Nov 23): [size=16]Dagang NeXchange Bhd (DNeX) reported a 25.2% increase in third quarter net profit to RM3.06 million from RM2.44 million a year ago, on higher revenue.

Revenue for the three months ended Sept 30, 2015 (3QFY15) rose 6.3% to RM23.03 million from RM21.67 million in 3QFY14.

DNeX, an e-commerce services provider for heavy industries, said in its Bursa Malaysia filing yesterday that its revenue grew mainly because of a 3% growth in its business-to-government (B2G) segment, and recurring revenue from leasing of directional drilling equipment for oil and gas (O&G) activities.

However, DNeX’s earnings for the cumulative nine months period (9MFY15) dipped 6.5% to RM7.44 million or 0.96 sen a share from RM7.95 million or 1.03 sen per share a year ago.

This was despite revenue increasing 11.1% to RM67.64 million from RM60.86 million, thanks to the growth in its B2G segment’s trade facilitation business and its energy division’s contribution.

DNeX said the current year result was affected by a one-off payment of RM5.7 million to undertake a staffing rationalisation exercise in 1QFY15.

“Having completed a financial turnaround in 2014, DNeX has been registering continued improvements in its performance this year where we have also managed to place initial building blocks for the group’s diversification into oil, gas and energy in its journey to become a serious player in this sector,” said DNeX group managing director Zainal Abidin Jalil in a separate statement.

He added that the current market downturn in the O&G sector presents attractive opportunities for the group to build scale in its diversification in this sector as cost of entry is lower.

DNeX said as part of its diversification into the O&G and energy sectors is the completion of its proposed acquisition of OGPC Group, and proposed acquisition of a 30% stake in Ping Petroleum Ltd.

These acquisitions, said DNeX, are “projected to contribute positively to its future earnings and enhance shareholders' value in the medium to long term".

DNeX’s share price closed unchanged at 26.5 sen a share today, giving it a market capitalisation of RM205.4 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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