News Article -- May 17, 2002

Firm eyes RM7.5m gain in three years from Com-Line

(source : The New Straits Times, Business)

COMPUTER Systems Advisers (M) Bhd (CSA) expects a significant revenue contribution from its soon-to-be subsidiary Com-Line Systems Sdn Bhd (Com-Line).

Its director Peter Yong said the company is confident of net profit contribution of more than RM7.5 million from Com-Line within the next three years.

He told reporters in Petaling Jaya yesterday that with an annual turnover of about RM20 million and several Government projects in the pipeline, Com-Line was set to assist CSA in its future growth.

"We see the acquisition exercise as an opportunity for the company to tap into other industrial segments, especially the Government and retail segment, which have not been our primary focus previously."

CSA has proposed to buy a 70 per cent stake in Com-Line for between RM4.4 million and RM32 million cash, depending on how the latter performs between now and 2005.

Funds for the purchase will come from proceeds of its completed rights issue.

Com-Line develops standard application packages and provides turnkey solution development services.

The company registered a net profit of RM1.38 million in 2000 and RM1.87 million in 2001, servicing clients such as the Home Ministry, the police and Habib Jewels.

CSA, for the full year ended March 2002, registered a 14 per cent decline in its pre-tax profit to RM22.75 million against a RM26.37 pre-tax profit recorded in the previous financial year.

Its turnover fell by 36 per cent to RM290.2 million from RM450.25 million before.

Its managing director Chuah Tai Eu said the less satisfactory results were due to the economic slowdown and increased competition in the IT industry.

However, looking at the more promising economic climate this time around and the various new business strategies to be implemented, CSA is optimistic of seeing an improvement this year.

Chuah said the company expected significant growth in its service business which currently contributes around 26.5 per cent to its total revenue.

"Since the market would most probably be more cautious to buy new equipment, we foresee an increased demand in services."

To further synergise its growth plans, Chuah said CSA is planning to acquire several more IT-based companies. "We are looking out for suitable companies to be part of our team. However, we would be very selective in this process," he added