2014 in Review: A look at ‘Digerati50’ stocks
By Goh Thean Eu January 6, 2015
- Winners include MyEG, Silverlake and TIME dotcom
- Most tech stocks owned by Digerati50 jumped in value
2014 was a somewhat challenging year for Malaysian investors, as many stocks, especially those on the oil and gas counters, were on a downtrend.
In terms of the broader picture, the market capitalisation of all companies trading on Bursa Malaysia declined by more than RM44 billion collectively. Bursa ended the year with a market capitalisation of RM1.65 trillion. [RM1 = US$0.29]
While the overall picture seemed gloomy, the good news is that some companies managed to dodge the larger trend, in particular those tech companies owned by entrepreneurs who made into Digital News Asia’s inaugural Digerati50 list.
Perhaps two of the happiest tech entrepreneurs would be My EG Services Bhd (MyEG) cofounder Wong Thean Soon, also known as TS Wong; and Silverlake Axis Ltd founder Dr Goh Peng Ooi. MyEG is an Internet company while Silverlake Axis specialises in banking software.
In 2014, MyEG's market capitalisation (cap) increased by 60% while Silverlake Axis’ market cap jumped by close to 50%.
Patrick Grove, who bases most of his operations out from Malaysia, is likely having mixed feelings about the way his empire panned out in 2014.
On the one hand, his Australian Securities Exchange (ASX) listed iCar Ltd and iProperty Group Ltd, as well as locally-listed Rev Asia Bhd, experienced growth in market value of 19%, 38% and 25%, respectively.
On the other hand, the share price of Ensogo Ltd (formerly known as iBuy Ltd) has tumbled by more than 70%.
Below is a look at how these companies, all owned and/ or founded by Digerati50, performed in 2014 in terms of financial and stock performance, in no particular order:
In 2014, the company’s share price appreciated by more than 48%, from S$0.84 early this year to S$1.25 (US$0.64 to US$0.95) at year’s end.
The jump in its share price further strengthened its market cap to more than S$2.81 billion (US$2.25 billion).
Goh’s indirect stake of 66.39% in Silverlake Axis (via Intelligentsia Holding Ltd) is now worth more than S$1.8 billion (US$1.44 billion), compared with about S$1.2 billion (US$960 million) in early 2014.
For the financial year ended June 30, 2014, Silverlake Axis registered a net profit of S$248.9 million (US$199 million), representing a 26% increase against the previous financial year. Revenue jumped 25% to S$500.7 million (US$400 million) during the same period.
Of the company’s total revenue, more than 70% came from software licensing, as well as maintenance and enhancement services.
The year saw MyEG cementing itself as the most valuable Internet company in Malaysia. MyEG, which was cofounded by Wong in 2000, has grown from strength to strength over the past few years.
For the full year ended June 30, 2006, it posted revenue of RM19.26 million (US$5.5 million) and a net profit of RM7.06 million (US$2.01 million). Fast-forward to the full year ended June 30, 2014, and MyEG's revenue was RM109.87 million (US$31.35 million) while net profit was RM50.11 million (US$14.3 million).
In 2014, MyEG stock was among the better performing tech stocks in the country, as its share price gained by 60% to RM4.22, from about RM2.63.
This means its market cap was worth more than RM2.5 billion (US$713 million) as at Dec 31, 2014.
Wong’s stake in MyEG, comprising approximately 7.4% directly and 33.3% indirectly, is now worth some RM1.02 billion (US$290 million).
Despite the widening net losses incurred by the company, shareholders remained confident in iProperty’s prospects.
In 2014 alone, the company’s share price on ASX rose by 38%. It now commands a market cap of slightly more than A$500 million (US$408.4 million).
iProperty chairman Patrick Grove, via Catcha Group Pte Ltd, has an indirect stake of about 16.7%. This means that his (indirect) stake in the company is worth approximately A$83.5 million (US$68.21 million) as at Dec 31, 2014.
(In April 2014, Catcha Group had 22.8% of iProperty. However, its stake was reduced to about 16.7% after it sold 10 million iProperty shares and issued new iProperty shares to REA Group in relation to the acquisition of Squarefoot in Hong Kong).
The year also saw REA Group, which emerged as a substantial shareholder in iProperty in July, expanding its stake in the company to 19.9%, making it the single-largest shareholder.
Although iProperty’s first half financial performance showed widening net losses, it managed to grow operationally. During the first half, the company broke even in terms of earnings before interest, tax, depreciation and amortisation (EBITDA).
This is a big improvement compared with the loss before interest, tax, depreciation and amortisation of A$3.23 million (US$2.64 million) in the first half 2013.
While the official financial numbers for the year 2014 have yet to be announced, the company has issued a statement saying that it expects a strong uplift in revenue for the last quarter of 2014.
It also added that it expects its EBITDA to be in excess of A$700,000 (US$571,788).
Although it did not grow as much as iProperty, iCar Asia’s performance last year was also somewhat encouraging.
The company’s shares on ASX gained by about 19.7% in 2014. It closed the year at A$1.09 per share, valuing the company at over A$237 million (US$194 million).
Based on its latest filing with ASX, the Catcha Group has a 33.18% stake in iCar, comprising the 17.9 million shares (8.4%) it owns directly and the 52.5 million shares it owns indirectly (via its 58%-owned Rev Asia Bhd).
As at Dec 31, 2014, the 33.18% stake was valued at approximately A$78 million (US$63 million).
While its share price performance looked encouraging, its first half showed net losses widened by more than double.
For the first half ended June 30, 2014, it registered a net loss of A$6.34 million (US$5.18 million), versus A$2.34 million (US$1.91 million) in the first half a year ago. During the same period, revenue doubled to A$1.1 million (US$900,000).
Although Rev Asia’s share price was on a declining trend in the fourth quarter 2014, the company still managed to end the year on a positive note.
For the year 2014, its shares on Bursa Malaysia gained by 25%. Trading at 62 sen early this year, Rev Asia shares closed the year at 77.5 sen, valuing the company at RM104.35 million (US$29.78 million).
Rev Asia currently owns more than a 24% stake in iCar. This stake, as at Dec 31, 2014, is valued at approximately A$56 million (US$45 million).
A few months ago, Rev Asia announced its intention to dispose of the iCar shares it owns. Assuming the shares were sold at a discount of 20% (of the Dec 31 prices), they were still worth some US$36 million, or 20% more than Rev Asia's market cap on Dec 31, 2014.
For the nine months ended Sept 30, 2014, Rev Asia, formerly known as Catcha Media Bhd, registered a net loss of RM2.13 million (US$610,000).
The company's online classified business suffered a loss of RM1.81 million (US$520,000), mainly due to the share of loss in iCar amounting to RM7.82 million (US$22.31 million).
Rev Asia, in a statement to ASX, said that the rationale for the disposal of iCar shares was partly to unlock the value of its investment in iCar.
Grove, via the Catcha Group, as an indirect stake of 58% in the company.
2014 was a painful year for Ensogo investors – the company’s share price on ASX plunged by more than 70%. The shares, which traded at A$0.33 early this year, ended the year at just A$0.08.
The company, formerly known as iBuy, saw its market cap fall to A$34.51 million (US$28.16 million). Its market cap was over A$140 million early this year.
Grove’s indirect stake of 24.75% in Ensogo (via the Catcha Group) is worth A$8.54 million, versus over A$34 million early this year.
For the first half ended June 30, 2014, the company registered a net loss of A$6.66 million, on the back of A$25.47 million revenue.
Fusionex International Plc
Fusionex International, an international provider of enterprise software specialising in analytics and big data solutions, saw its market cap shed 25% to £123.6 million (US$192 million) in 2014.
While Ivan Teh, the controlling shareholder with over a 51% stake, may not be happy with the stock price trend in 2014, he will probably be encouraged to see that the company’s growth momentum was sustainable.
For the first half ended March 31, 2014, it recorded a 35% jump in revenue to RM25 million (US$7.15 million, and a 41% jump in gross profit to RM19 million (US$5.44 million). In terms of EBITDA, the company registered a 36% growth to RM10.1 million (US$2.89 million).
It also announced dividends of 2.05 pence, an improvement from the two-pence dividend it gave out in the fiscal first half of 2013.
The year also saw Fusionex securing its first ‘Giant’ contract win in January. (Giant is the company's big data analytics solution).
The multimillion-dollar contract, which will last for five years, involves a client which has global operations in the travel, leisure and hospitality sector.
About two months later, Fusionex announced that its Giant solution helped the company secure two more customers – one from the retail sector, the other from the aviation sector.
It has been a year of ups and downs for MOL Global Inc. Since it was listed on the Nasdaq Global Market, the company's share price has been on a downtrend most of the time.
As at December 31, 2014, the company's shares were closed at US$3.05 or about US$205.89 million in terms of market capitalisation. At US$3.05, it is about 75% lower than the initial public offer price of US$12.50 per share.
The company is approximately 45% owned by Malaysian tycoon Vincent Tan and 9.9% owned by founder and chief executive officer Ganesh Kumar Bangah.
Based on year-end prices, Tan’s and Ganesh’s stake in the company were worth US$92.65 million and US$20.6 million, respectively. Compared with prices on Nov 19, their stakes were worth US$243.9 million and US$54.2 million, respectively.
The plunge in its share price was partly due to speculation arising from the departure of its chief financial officer as well as the delay in the release of its financial results.
For the nine months ended Sept 30, 2014, MOL Global’s net profit rose 19% to RM13.62 million (US$3.9 million), while revenue increased by 15% to RM143.45 million (US$41 million).
While the nine-month figures look encouraging, investors were concerned about its third quarter numbers, whereby net profit fell by 60% to RM2.43 million (US$700,000).
Although the company’s first 100 days on Nasdaq were bumpy, no one can take away the fact that MOL Global is the first Internet company from South-East Asia to be listed on Nasdaq.
2014 was a good year for Time dotCom Bhd, one of the few publicly-listed telecommunications companies owned and controlled by entrepreneurs.
The company, which is 36.24% indirectly owned by chief executive officer Afzal Abdul Rahim and his business partner Gan Te-Shen, grew in terms of both profitability and stock performance.
In 2014, its shares on Bursa Malaysia gained by more than 35%, ending the year at RM4.88 (US$1.40), giving it a RM2.8-billion (US$801-million) valuation.
For the nine months ended Sept 30, 2014, TIME dotCom’s revenue rose 9% to RM438.23 million (US$125.39 million), although net profit fell by more than 70% to RM123.4 million (US$35.31 million) – this was however due to higher profits in 2013 mainly because of a one-off, exceptional item.
Under a normalised basis, excluding one-off items, the company registered a 14.8% gain in pre-tax profit.