January 21, 2008
Petaling Jaya, 21 January 2008 - MESDAQ-listed financial solutions specialist eBworx Bhd is in a capacity expansion mode to prepare for a bigger order book, according to chief executive officer Tan Suan Fong.
“We have been focusing on operational efficiency and recurring business with healthy margins for the past three years.
“We have now achieved a certain level of efficiency and are aiming to bring in more revenue, which means that we need more capacity,” he told StarBiz.
eBworx, which intends to enlarge the size of its order book in the next two years, is working on bringing in resources from overseas to increase the size of its delivery team.
According to Tan, eBworx is targeting to add 30 more engineers, mainly from China and Indonesia, thus increasing its capacity to deliver by about 20%.
“This will prepare eBworx for more contracts which are expected to come in.
“At this juncture, we have bid for RM40mil to RM50mil worth of contracts. Our hit rate is about 50%, which is quite good for the industry we are in,” he said, adding that by 2009 its order book was expected to expand to RM30mil or RM40mil at any one time.
At present, eBworx has an order book of about RM20mil and it secures RM10mil to RM15mil new orders every quarter. Currently the group has about 260 employees, of whom 160 are in Malaysia, 50 in China (30 in research and development), 20 each in Thailand and Indonesia, and 10 in Singapore.
Tan expects contracts to pour in from new as well as existing markets.
“Our focus this year will be on new markets. We are intensifying our sales and marketing efforts, particularly in Vietnam, and are currently doing a preliminary study on the market in Dubai. I am very sure we should be able to penetrate the Vietnam market this year.
“We will also continue to put in more effort in our existing markets, especially Indonesia and Thailand,” he said, adding that South-East Asia and China were the primary markets for the group.
He noted that Vietnamese banks were currently investing heavily in information technology (IT) to hone their competitive edge.
“Three years ago they were very focused on core banking infrastructure such as automated teller machines, but now they are looking at Internet banking, mobile banking and credit management software. This is our forte.
“We foresee some small and medium-sized contracts, particularly in the areas of Internet banking and mobile banking, from Vietnam this year,” he said.
He expects banks in Thailand and Indonesia to continue to spend money on IT due to the Basel II requirement.
EBworx will not only look at the tier-one banks in those countries –its traditional focus market – but also the cream of the tier-two banks.
“We are starting to build the contracts pipeline for 2009 and more will be coming from Thailand and Indonesia,” Tan said.
In preparation for increased business from Thailand and Vietnam, the group has set up a sales and marketing office, eBworx (Indochina) Co Ltd, in Thailand for consulting, designing, developing, implementation, installation, repairing, maintenance and inspection of all kinds of enterprise software solutions for the banking and finance industry.
“Our strategy is to build a bigger portfolio overseas and increase overseas revenue to 70% from the current 50% by 2010. At the end of the day, there are only nine banks in the country,” Tan said.
Nevertheless, Tan said, the local market still contributed handsome revenue to the group.
He added that there were fewer banks in the country but their spending power had increased due to their larger size, thus making bigger projects more affordable.
In the next two years, eBworx will focus on selling enhancement services to existing installation sites – about 80% of its business comes from existing customers – as well as products which require less customisation such as trade finance solutions for shorter implementation.
EBworx has three lines of business categorised under different products.
The first is the credit management software, which Tan said is the group's bread and butter, contributing about 60% to revenue. The software, which can be used for consumer, small- and medium-sized enterprises, commercial and corporate loans, manages the whole lifecycle of bank loans – from the sale of the loans to the restructuring of non-performing loans.
It is a recurring business as the system is huge and complex and will take a few years to implement.
The second category is electronic banking, which has four sub-products – Internet banking, Internet corporate banking (cash management system), mobile banking and branch delivery system.
This business segment contributes 35% to revenue.
The third is the trade finance system, a new rising star for the group. Tan expects revenue contribution from this business segment to jump to 20% this year from 5%.
“We foresee that the division under our subsidiary SpringWorx Technovations Sdn Bhd clinching a few big contracts as businesses expand globally,” he said.
EBworx has a 51% stake in SpringWorx with an option to buy up the balance 49%, which Tan hopes to do this year.
Besides targeting the local market, eBworx plans to form partnerships with foreign distributors to distribute the product, as it is a standard software and easier to sell through distributors.
Related Links: As reported in “The Star”, ‘The Ceo Interview’ by Elaine Ang
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