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DNeX announces 6Q FY2023 financial results, focuses on long-term growth

Cyberjaya, 29 February 2024 – Dagang NeXchange Berhad (“DNeX”) has announced its financial results for the sixth quarter (“6Q FY2023”) and 18-month period ended 31 December 2023 (“18M FY2023”).

In 6Q FY2023, the Group reported a revenue of RM283.7 million and a loss after tax and non-controlling interest (“net loss”) of RM14.6 million. During the quarter, DNeX’s Technology division remained as the major revenue contributor, accounting for RM145.4 million or 51 per cent of total revenue, as compared to RM157.2 million recorded in the previous quarter (“5Q FY2023”). The softer performance was mainly due to weaker volume of wafer shipments.

Contributions from the Energy and Information Technology (“IT”) divisions stood at 34 per cent and 14 per cent respectively. The Energy division posted RM97.2 million in revenue from RM114.8 million recorded in 5Q FY2023, due to lower average oil prices of USD81.9 per barrel as compared to USD97.2 per barrel in 5Q FY2023. The IT division generated revenue of RM41.1 million, against RM55.5 million in the previous quarter, in tandem with completion and progressive work done of certain projects.

For 18M FY2023, the Group recorded a revenue of RM1.91 billion and incurred a net loss of RM119.9 million. After adjusting for one-off non-operational expenses relating to asset impairments, reversal of deferred tax assets and deferred tax liabilities arising from the enactment of the UK’s Energy Profit Levy (“EPL”), the Group would have reported a “normalised” net profit of RM98.8 million in 18M FY2023.

According to Tan Sri Syed Zainal Abidin Syed Mohamed Tahir, Executive Chairman of DNeX, the Group is committed to identifying and capitalising on high-growth opportunities within the Technology, Energy, and IT sectors. This approach is key to maintaining the Group’s competitive advantage and its standing in the sectors that it operates in.

“In the Technology sector, our strategic focus on enhancing product mix with emerging technologies such as microelectromechanical systems (“MEMS”) and Silicon Photonics is gaining positive momentum. We are starting to experience a gradual growth in demand for emerging technologies, which command higher average selling prices and profit margins. On-going efforts in product testing and qualifications with global customers, coupled with our 20 per cent capacity expansion in 2023, position us well to capitalise on the anticipated industry rebound in the second half of 2024 with rising demand for artificial intelligence (“AI”) and high-performance computing (“HPC”), coupled with stabilising demand for smartphones, personal computers, infrastructure and resilient growth in automotive sector.”

He said through Ping Petroleum Limited, the Group plans to leverage its expertise in managing late-life oil and gas (“O&G”) assets which now encompass three assets in UK (Anasuria, Avalon and Fyne) and three assets in Malaysia (Meranti Cluster, A Cluster and Abu Cluster). Development of the Abu Cluster is expected to unlock near-term production, with first oil targeted by early 2025.

Furthermore, the recently published Petronas Activity Outlook 2024-2026 report outlines Petronas’ goal to sustain and grow Malaysia’s O&G production to two million barrels of oil equivalent per day by 2025 and beyond. This presents significant opportunities for OGPC Sdn Bhd as a service provider and distributor of technical products and equipment in the O&G sector.

In the IT segment, he said the Group intends to focus on securing large-scale IT and digitalisation projects in both public and private sectors, locally and globally. This includes a specific focus on the Middle East and North Africa region, where the Group seeks to capture opportunities in smart city development, egovernment services, and system integration projects. “To achieve this goal, we will be leveraging on our successful track record in delivering critical national IT projects and collaborate with leading technology companies to develop and deliver innovative solutions that accelerate the digital transformation for our clients.

Furthermore, we are actively expanding our service offerings by strengthening existing capabilities and pursuing opportunities in emerging technologies including the Internet of Things, Big Data, and analytics,” he added.

As announced on 17 August 2023, DNeX changed its financial year from 30 June to 31 December. The upcoming audited financial statement will reflect this change, which will encompass the period from 1 January 2024 to 31 December 2024. As at 31 December 2023, the Group is in a healthy net cash position with total cash balance of RM670.0 million, exceeding total borrowings of RM297.4 million.