It had garnered investors’ interest after it announced a special dividend of 45 sen per share following the disposal of BCM Electronics Corp Sdn Bhd. Though shareholders rejoice over the windfall they are nonetheless concerned over the company’s future earnings as BCM was its only profitable subsidiary.
Comintel is classified as an affected listed issuer by Bursa Malaysia. It posted a net loss of RM33 mil for financial year ended Jan 31, 2018 from a net profit of RM17.7 mil in the previous year, on the back of lower revenue of RM382.2 mil versus RM406.8 mil. This was due largely to a one-time loss on disposal of a subsidiary of RM14 mil and lawsuit losses of RM21.6 mil.
The company is, however, keeping its loss-making subsidiary, Comintel Sdn Bhd, a system integrator for information technology and telecommunication solutions which has been in the red in the past five years.
Nonetheless, its MD Lim says its system integration solution business was once the group’s “cash cow” while BCM managed to turn around in FY16 due mainly to favourable exchange rates.
On Aug 30 2017, Comintel entered into a term sheet with Aurelius Holdings Sdn Bhd for the proposed sale of BCM for RM123.8 mil, which was based on Aurelius assuming BCM’s existing liabilities. The proceeds from the disposal will be used mainly for Comintel’s special dividends as well as development and expansion of green waste management and waste-to-energy businesses.
Its foray into waste-to-energy business is not new as the green energy plan started three years earlier. The three years were about consolidating (the operations).
Despite the delays, Lim expects the green energy business to begin contributing to the group in FY19. However, observers do not expect earnings from the gasification plant to turn around Comintel’s top line in the near term as they may not be sufficient to offset losses from its existing system integration solution business.
On Comintel’s system integration solution business, Lim says its continued losses were due largely to the high number of skilled workers employed. However, he says on a project basis, Comintel is not incurring losses.
Comintel received fewer government orders in the past years, especially for defence maintenance, command and control, as well as defence and public safety communication systems. To offset these, the company hopes to market its communication systems overseas.
Comintel is in talks with a Chinese ship builder, which was awarded a contract to build four naval vessels for Malaysia in 2016.