IDB to be game changer for iDimension

by **Cals** Mon 14 Apr 2014, 17:38

Business & Markets 2014

Written by Cynthia Blemin of theedgemalaysia.com

Monday, 14 April 2014 10:01

KUALA LUMPUR: iDimension Consolidated Bhd sees its proposed acquisition of a 60% stake in IDB Interactive Sdn Bhd (formerly Selinsing Xpress Sdn Bhd) as a game changer for the group, with IDB helping the group to return to profitability and potentially contributing to half of iDimension’s profits this financial year ending Dec 31, 2014 (FY14).

iDimension, a provider of manufacturing software solutions, is seeking shareholder approval to grow its stake in IDB to 80% at an extraordinary general meeting on April 29. The ACE Market-listed company already owns 20% of IDB, following completion of the acquisition for RM5 million cash in June last year.

“If IDB comes onboard, the company would be contributing at least 50% to the group’s profits for FY14,” iDimension group chief executive officer Daniel Boo Hui Siong told The Edge Financial Daily in an interview recently.

iDimension is seeking to pay the RM15 million for the proposed acquisition of the 60% stake in IDB with RM10 million in cash and the remaining RM5 million via the issuance of new shares.

According to a Bursa Malaysia announcement on March 19, iDimension said based on the unaudited consolidated net profit of IDB for FY13 of RM2.03 million and the net loss of iDimension of RM416 million for FY13, future contribution to the net profit of the iDimension group, subsequent to the proposed acquisition, may be more than 25%.

IDB is an online gaming company that has gaming rights from a US-based firm Valve Corp, the creator of game franchises such as Counter-Strike, Dota 2, Half-Life, Left 4 Dead, Portal and Team Fortress.

iDimension was in the red in FY12 after the group reported a net loss of RM2.91 million compared to a net profit of RM2.75 million in FY11, as its software solutions, software systems and maintenance segments reported losses due to profit-margin declines.

For FY13, the group narrowed its net loss to RM416,000 as both its business segments saw improved margins but not enough to post a profit. Revenue for FY13 rose 8% to RM10.05 million from RM9.34 million.

Boo said since last year, iDimension has started diversifying its operations from focusing solely on the development of software solutions for companies in the manufacturing sector to include those in the oil and gas, education and plantation sectors.

“Previously we were selling solutions to manufacturing factories, but last year we decided to diversify,” he said, adding that prior to iDimension’s listing in 2011, some 80% of its revenue was derived from manufacturing companies.

The group then faced challenges when companies started moving out of Malaysia and relocating their businesses to other countries where cost of operations is lower, Boo added.

Boo, who is the group’s biggest shareholder with a 39.224% stake, reckoned that it makes more sense for iDimension to acquire a bigger stake in IDB before the latter’s valuation rises and since both companies can complement each other in their day-to-day operations.

“We did a 20% acquisition last year … we invested in IDB at the right time. Our business has since taken off,” he said, noting that iDimension returned to the black in the last two quarters of FY13.

“If the business is what we have experienced for the past six months, we foresee that IDB’s profits will contribute significantly to our group performance [going forward],” he added.

IDB co-founder Stephen Ng said the company sees the benefit and growth potential from the synergy with iDimension.

“We have gaming contents, but we also want to improve our interface with our online gamers that come to our website to purchase and play games, especially our payment gateways,” he said, adding that iDimension can provide software solutions to help improve and fully automate IDB’s customer services.

The online gaming industry in Southeast Asia has a growth potential of between 15% and 20% a year, said Ng. IDB currently has a client base of online gamers of nearly 80 million to 100 million in five countries including Indonesia, Vietnam and the Philippines.

iDimension shares closed up 1.5 sen or 8.11% to 20 sen last Friday, giving a market capitalisation of RM45 million.

This article first appeared in The Edge Financial Daily, on April 14, 2014.