This article first appeared in The Edge Malaysia Weekly on September 4, 2023 - September 10, 2023

In May this year, SMRT Holdings Bhd underwent a restructuring to carve out its education business and become a pure provider of Internet of Things (IoT) solutions.

But it took a big hit in its books for disposing of SMR Education Sdn Bhd to Cyberjaya Education Group Bhd for RM49.5 million. In its latest quarterly results, SMRT recorded a net loss of RM69.3 million.

The company’s education subsidiary was held by SMR Education Group Sdn Bhd, which in turn holds a 42.98% stake in Cyberjaya University Education Group Bhd. SMRT sold its interest in the education business to the family of its major shareholder, Tan Sri Dr R Palaniappan.

Previously, SMRT had claimed that it was saddled with a loss-making education business, thus explaining its exit from the sector.

Apart from the disposal, the restructuring also saw SMRT acquire the remaining 36% equity interest in N’osairis Technology Solutions Sdn Bhd for RM72 million, hence making it a wholly-owned subsidiary.

Now that it is a pure technology company, SMRT commands a higher valuation on the market. Year to date, its value has increased by 440%, an indication that the market has already priced in its positioning as a pure technology company.

The question is, can SMRT deliver the numbers?

Without the education business, the company posted a loss in its latest quarter to the tune of RM7.3 million on a turnover of RM17.6 million. However, its earnings before interest, taxes, depreciation and amortisation (Ebitda) from the technology business was robust at almost RM32 million.

Going forward, can SMRT deliver on its promise of the IoT business?

The biggest challenge for the IoT industry is for society to embrace the technology. On this score, many fear security breaches from cyberattacks. Indeed, the industry has some convincing to do before society at large accepts IoT technology.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.