Digistar in talks to buy ICT firm

by **Cals** Tue 01 Apr 2014, 01:24

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Monday, 31 March 2014 10:29

KUALA LUMPUR: Digistar Corp Bhd is in talks to acquire an information and communications technology (ICT)-related company to boost its security monitoring system business, said its group chief executive officer Datuk Wira Lee Wah Chong.

“We are in the midst of negotiations … to take over an ICT-related company and [use] its resources to jumpstart our [security monitoring system] business,” he told reporters after the company’s annual general meeting last Friday.

Lee declined to reveal the name of the company except to say that it will be a “large acquisition” for Digistar.

“We are negotiating with [a] telecommunications reseller [to buy the company]. We hope to announce this within the next three months,” he said.

Lee said the proposed acquisition will complement its central monitoring system (CMS) business, a security monitoring system that has been in operation for two months now.

“We are currently focusing on CMS. The market for [it] is very large,” he said, adding that [the CMS business] targets to obtain half a million customers within the next five years.

“The CMS is a growth engine for the group [for] the next five years. We are confident of turning around this financial year,” he said, adding that its CMS segment will provide Digistar with recurrent income.

For the financial year ended Sept 30, 2013 (FY13), Digistar reported a net loss of RM10.83 million, compared to a net profit RM5.95 million in FY12, due to higher capital expenditure to build its four CMS control centres including land-related costs. Revenue fell 30.53% to RM48.29 million from RM69.52 million.

Lee said Digistar will market the CMS service overseas by the end of this year, with a focus on Asia-Pacific countries.

“We are targeting Thailand and Indonesia, and were recently in discussion with Turkey.

“We are also in talks with [property] developers, banks and shopping malls [for the new system]. The official launch will be held in end-April,” said Lee.

On its property development business, Lee said 70% or 347 units of the group’s serviced apartments in Melaka dubbed The Heritage has been sold to date. The project has a gross development value of RM150 million.

“The project is scheduled to be completed by the end of the year and expected to contribute significantly towards the group’s revenue,” he said.

“We’re looking for more landbank in the Klang Valley and Melaka, with good potential and prices. [However], we [will tread carefully] because we are still new in this sector,” he said.

Lee is also confident that the completion of the Malaysian National Technology Advancement Centre, for which the group has a 15-year concession worth RM240 million to build and manage, will contribute positively to the group’s earnings.

On whether Digistar is expected to benefit from Puncak Semangat Sdn Bhd’s recent contract win to build, operate and manage the infrastructure for digital terrestrial television broadcast (DTTB) service in Malaysia, Lee said the project is still at the early stage.

“We will bid for the job. It’s competitive because overseas competitors are also eyeing the DTTB project.

“Digistar being a local company with technical know-how would like to have a part [in the project] and hope that the government will give priority to local companies,” he said.

This article first appeared in The Edge Financial Daily, on March 31, 2014.