This article first appeared in The Edge Malaysia Weekly on August 5, 2024 - August 11, 2024

Data storage and cloud specialist Kronologi Asia Bhd (KL:KRONO) achieved peer-topping profit growth from FY2021 to FY2023 among listed tech companies with a market capitalisation of RM100 million to RM1 billion.

With that, Kronologi bagged its first win, Highest Growth In Profit After Tax Over Three Years, at The Edge Malaysia Centurion Club Corporate Awards 2024.

The ACE Market-listed group achieved two straight years of record net profit, with RM24.5 million in the financial year ended Jan 31, 2023 (FY2023), and RM23.7 million in FY2022 — a significant improvement from RM1.3 million (annualised) in FY2021.

The strong earnings growth over the past three years translated into a compound annual growth rate (CAGR) of 82.7%. The impressive results achieved in FY2022 and FY2023 were attributed partly to the completion of the group’s acquisition of the remaining 83.33% equity interest in Quantum China Ltd (QCL), as the deal came with a profit warranty of US$2 million for FY2022 and US$2.5 million in FY2023.

Kronologi had held 16.67% of QCL since 2018. QCL provides “Quantum” branded enterprise data management (EDM) infrastructure technology company solutions in China, including data backup, storage and recovery solutions.

Kronologi provides on-site and off-site EDM and data storage solutions, offering as-a-service (AaS) and customisable options for on-premise, cloud-based and hybrid systems. It has a diversified customer base, consisting of government sectors, large enterprises, food and beverage companies, banks, financial institutions, stock exchanges, data centres and telecommunications, and media and broadcasting companies.

A decade ago, Kronologi was listed on Bursa Malaysia, raising RM17.18 million in proceeds with the issue of 59.25 million new shares at 29 sen each. Today, apart from Malaysia, it has also established footholds in Singapore, China, the Philippines, India, Hong Kong and Taiwan.

In a briefing last month, the group was eyeing up to RM400 million in revenue for FY2025 amid optimism about a broader economic recovery. On top of that, it says it is poised to take advantage of the artificial intelligence growth trend in data-driven digitalisation and hybrid cloud.

For FY2024, Kronologi reported a revenue of RM301.39 million with a gross profit margin of 24%, leading to a net profit of RM8.63 million.

For the first quarter ended April 30, 2024 (1QFY2025), its revenue declined 8.3% year on year (y-o-y) to RM57.75 million from RM63.03 million and net profit fell 43.4% y-o-y to RM1.44 million from RM2.55 million. The decline in profitability was due to lower profit from its business operations and higher operating costs — such as solution centre-related expenses — as well as right-of-use assets and lower revenue.

Looking ahead, Kronologi expects the group’s customer retention to remain strong. It highlighted the comparable gross margins experienced by the group during the period as it worked with customers to overcome the uneven economic recovery and their planned IT spending over the next few quarters.

According to its Annual Report 2024, as at April 30, Kronologi had three substantial shareholders: Tan Jeck Min (13.43%), Desert Streams Investments Ltd (11.53%) and Edmond Tay Nam Hiong (5.74%).

Tan, a 54-year-old Singaporean, is an executive director and chief operating officer of Kronologi. He had been instrumental in the growth and development of Quantum Storage (South Asia) Pte Ltd between 2003 and 2013.

Tay, a 53-year-old Singaporean, is executive director and CEO of Kronologi. He formerly sat on the Information Technology Standardisation Board with the Info-communication Development Authority of Singapore on the e-payment and security chapter as well as the Singapore Infocomm Technology Federation.

Desert Streams Investments — the vehicle of businessman Enrique Galang Velasco — first surfaced as a substantial shareholder in Kronologi with an 18.49% stake at end-April 2019, after an allotment of shares as part of the consideration paid by Kronologi for the acquisition of IT infrastructure company Sandz Solutions (Singapore) Pte Ltd for RM75 million. Sandz provides IT infrastructure solutions in the Philippines.

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