KUALA LUMPUR (Jan 22): TechStore Bhd, an enterprise information technology (IT) services provider set to make its debut on the ACE Market of Bursa Malaysia on Feb 18, intends to collaborate with industry players as part of its strategy to secure larger and more complex projects.
TechStore managing director Tan Hock Lim on Wednesday said the company is hoping to team up with global original equipment manufacturers that offer unique solutions.
“The world is changing too rapidly for global giants to expand their businesses by deploying entire R&D (research & development) or operational teams here. It would be costly and inefficient for them," Tan said at a press conference held in conjunction with the launch of TechStore’s initial public offering (IPO), which aims to raise up to RM30 million.
"Companies like us possess the necessary know-how and capabilities, making collaboration a cost-effective and competitive option,” he added.
TechStore is currently tendering for projects across several industries worth a combined RM647.2 million. The group has secured 11 ongoing projects with unbilled jobs worth RM104.6 million, of which RM40.6 million is expected to be realised this year, with the remainder projected over the next two financial years.
Commenting on the company’s chances of securing tenders, Tan said, “The winning percentage in today’s market is difficult to predict, but we estimate an average success rate of around 20%".
For the financial year ended Dec 31, 2023 (FY2023), TechStore posted a flattish profit after tax (PAT) of RM7.72 million, up from RM7.21 million in the previous year. This on the back of a 47% jump in revenue to RM62.21 million from RM42.24 million.
TechStore derives most of its revenue from contracts in the public land transportation sector — 83.6% or RM52 million in FY2023 — and aims to expand its presence in this industry.
TechStore had been involved in two of three light rail transit projects in the Klang Valley and contributed to the first mass rapid transit line, the Kajang Line. One of its current projects is its participation in the Singapore-Malaysia Rapid Transit System link.
“While we don’t manufacture trains, we specialise in the technologies that support critical mission infrastructure with demanding requirements. Success in this area has set a high benchmark for us," Tan said.
He added that venturing into other industries such as utilities or leisure would require scaling up the company’s limited resources, a move that will be supported by proceeds from the IPO.
The public issuance from TechStore's IPO is expected to generate gross proceeds of RM25 million, with RM11.5 million allocated for working capital. Meanwhile, RM5 million will be used to partially repay bank borrowings, which currently total RM33.4 million.
The remaining funds will be used for recruiting business development personnel, capital expenditure and defraying listing expenses.
At an IPO price of 20 sen per share, TechStore would have a market capitalisation of RM100 million, valuing the company at 12 times its FY2023 earnings.
M&A Securities Sdn Bhd is the principal adviser, sponsor, sole underwriter and placement agent for the IPO.