This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

IN a surprising turn of events, HeiTech Padu Bhd (KL:HTPADU) has emerged as the front runner to bag the RM1 billion National Integrated Immigration System (NIISe) contract, sources familiar with the matter tell The Edge.

The Edge previously reported that HeiTech Padu had been dropped from the project — which is slated to integrate the border management systems of various agencies of the Ministry of Home Affairs — in favour of Dagang Nexchange Bhd (KL:DNEX) and Theta Edge Bhd (KL:THETA). It is said, however, that HeiTech Padu has now made a comeback and stands a good chance of winning the contract.

“If all works out well, HeiTech Padu may announce the award soon,” says a source, who is aware of the situation in the industry and speaking on condition of anonymity.

DNeX executives and some officials linked to Theta Edge were also aware of the development, but declined to comment.

HeiTech Padu’s return to the race for the NIISe project comes after the company was dropped in May from the list of three candidates, which included DNeX and Theta Edge.

The three were shortlisted from a group of companies that had submitted proposals last December. They included Datasonic Group Bhd (KL:DSONIC), Scicom (MSC) Bhd (KL:SCICOM), Bestinet Sdn Bhd, MyEG Services Bhd (KL:MYEG), Microlink Solutions Bhd (KL:MICROLN), Infomina Bhd (KL:INFOM), REDtone Digital Bhd (KL:REDTONE) and Sapura group.

HeiTech Padu is the incumbent operator of the NIISe project with its Malaysian Immigration System (MyIMMs), which was implemented in 1993.

It is understood that HeiTech Padu has emerged as the front runner despite a recommendation made by the tender committee of the NIISe project at a meeting at end-July for the contract to be awarded to either DNeX or Theta Edge.

It is also well known in tech circles that an immense amount of lobbying had been carried out for the NIISe project. REDtone — in which businessman Tan Sri Vincent Tan Chee Yioun’s Berjaya Group Bhd has a 40.79% stake and Sultan Ibrahim of Johor, who is now the King, holds 17.34% equity interest — surfaced as a substantial shareholder in Theta Edge in July this year and now controls 10% of the company’s share base.

REDtone is involved in telecommunications and managed telecom network services, the Internet of Things and cloud business, and smart farming. It also operates as a reseller of Starlink internet services provided by Elon Musk’s SpaceX.

Interestingly, REDTone surfaced as a substantial shareholder in HeiTech Padu on Aug 24, with 5.08% equity interest, and has since upped its shareholding to 6.38%.

Other substantial shareholders of HeiTech Padu are Rosetta Partners Sdn Bhd (with a 15.9% stake), MyEG Services (15.89%) and Padujade Corp Sdn Bhd (14.16%). Rosetta Partners is the vehicle of the Sultan of Kelantan, Sultan Muhammad V; and Padujade Corp is the flagship of Heitech Padu founder and executive deputy chairman Datuk Seri Mohd Hilmey Mohd Taib. Meanwhile, publicly traded MyEG Services is almost 30%-controlled by businessman Wong Thean Soon.

Businessman Datuk Farhash Wafa Salvador, a former political secretary of Prime Minister Datuk Seri Anwar Ibrahim, ceased to be a shareholder of Rosetta Partners on April 18 this year, about a month after the company surfaced in HeiTech Padu.

Theta Edge’s share price, which hit a multiyear high of RM3.06 on July 22, has shed more than 43% and closed last Friday at RM1.73 for a market capitalisation of RM204.1 million.

For its part, DNeX has come off from its 52-week high of 52.5 sen in intraday trade on June 12 and ended trading last Friday at 34.5 sen, translating into a market value of RM1.2 billion.

As for HeiTech Padu, the stock closed last Friday at RM2.30 for a valuation of RM256.1 million. Year to date, the counter is up more than 160%.

It is understood that DNeX, with a bid of between RM1.1 billion and RM1.2 billion, was looking to employ a system currently in use in several countries. Theta Edge, with a bid of RM800 million, had planned to come up with its own border control system and was said to have hired about 30 key personnel of HeiTech Padu as part of its plan to secure the NIISe project.

HeiTech Padu’s plans remain uncertain. Notably, last Friday, the company secured a RM133.73 million contract from the Road Transport Department of Malaysia (JPJ) to develop, provide, deliver, fit, configure, integrate, test and authorise, among others, the digital systems at JPJ for a three-year period from October 2024 to September 2027.

For its six months ended June this year, HeiTech Padu chalked up a net profit of RM581,000 on the back of RM124.9 million in revenue. For the corresponding period a year ago, the company suffered a net loss of RM7.8 million on the back of RM127.5 million in sales.

As at end-June this year, HeiTech Padu had cash and bank balances of RM39.76 million, while on the other side of the balance sheet, it had short-term borrowings of RM136.4 million and long-term liabilities of RM13.29 million.

HeiTech Padu had accumulated losses of RM21.35 million as at end-June. For the six-month period, net cash flow generated from operating activities was a negative RM39.43 million. 

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