REDtone targets 30% growth in revenue for FYE 2015

Wei SUNpix by Ashraf Shamsul

REDtone International Bhd, which aims to transfer listing to the Main Market of Bursa Malaysia in the first quarter of 2015, targets to achieve 30% growth in revenue in the current financial year ending May 31, 2015, said its founder and managing director Datuk Wei Chuan Beng (pix).

He said its four growth pillars - telecommunications, managed telco network, managed value-added and mobile services will be driving the growth in topline numbers.

In the financial year ended May 31, 2014, the company's net profit fell by 10% to RM22.6 million from RM25.1 million while revenue advanced slightly to 2% to RM144.8 million from RM142.0 million a year ago.

"The four growth pillars are showing positive and sustainable numbers. It has laid a strong foundation for us moving forward to have a base level of profitability," he said in an interview with the SunBiz.

"We have been taking a capital expenditure (capex) light approach, running the business on a recurring revenue model and leveraging on our core competencies. We will continue to be guided by these practices as we move into a new phase of growth," he said.

He said the company spend between RM5 million and RM10 million annually as capex.

On its planned listing transfer from the ACE Market to the Main Market, Wei said the move will help the telecommunication provider to strengthen its position to take on bigger projects.

"We are now in the position to undertake bigger projects. Some of these projects would require a very substantial amount of funding. We also believe it will strengthen our position to undertake bigger projects," he said.

Currently, Wei said the company is tendering for projects worth RM1.5 billion locally.

He said the company, which has been listed on the ACE Market for nearly 10 years, sees the listing transfer as an important phase for the company to strive for better growth.

"A lot of investors look for Main Market companies to invest. It is high time for us to have a larger pool of shareholders," he said, adding that the company is currently having meetings with its adviser to firm up the schedule for the planned listing transfer.

Wei said the company is expected to submit its proposal to the Securities Commission sometime in October or November for approval. It hopes that the transfer of listing will materialise in the first quarter of 2015.

REDtone's shares closed unchanged at 77.5 sen last Friday.

Meanwhile speaking on its tele-radiology services, Wei said the service is expected to contribute positively to the group's future earnings.

"We believe that this year it (the service) could make a positive impact and contribution to the group. We have already installed the system in Vietnam and are in discussion with hospital groups in the Philippines and Indonesia.

"Our subsidiary REDtone Max offers the system and technology for radiologist to have access to all kind of medical images and be able to write reports," he said.

Kenanga Research said REDtone's near-term catalysts include synergistic benefits that could be created under the network sharing and alliance agreement (NSA) with Maxis Broadband Sdn Bhd, continuous government and corporate data-related projects, and transfer of listing to the Main Market.

The research firm has maintained its 'market perform' call on REDtone with a target price of 77 sen.