Dagang Nexchange (DNeX) (former Time Engineering)

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DNEX (RM50.5 sen) - Securing new contracts ?

Some traders whispering that the company may secure new contracts. This, coupled with the positive bias in outlook as alluded by managemt recently, raises optimism on its prospects going forward.

Our analyst Jeremie is monitoring progress of development. He has a Buy call with SOP-derived TP of 80 sen.

Our chartist Sam Jun Kit gives his technical reading.... after all this is very much a trading idea..

Sam Jun Kit's technical reading on:

DNEX (RM0.505) - Pending for a trend reversal

After rebounding 36.4% from a low of RM0.37 to RM0.505 yesterday, DNEX is now trading near its downtrend resistance line of RM0.52.

A successful breakout above the downtrend resistance line will indicate a trend reversal, spurring DNEX to advance further toward RM0.57-0.62-0.73.

Failure to do so will see DNEX correct back to RM0.44-0.48 region.

Support:
RM0.42-0.45-0.48

Resistance:
RM0.52-0.57-0.68

Cut loss:
RM0.43

Source: HLIB

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ACCUMULATE (TECHNICAL)

The consolidation within the “descending triangle” pattern appears to be at the tail’s end as the stock price approaches the pattern neckline.

Given the gradual rise in trading volume in the past two days and a mild breakout move in RSI, we opine thebuying momentum will likely continue and is set to drive the stock price higher
in the near term.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/334292.pdf

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DNeX’s profit for April-June dives as tech biz falls into the red

By Tan Choe Choe

Source: theedgemalaysia.com

Reported a 70.4% drop in its net profit to RM47.51 million for the April-June 2023 period, from RM160.59 million in the corresponding three months in the previous year, as its tech business fell into a loss amid lower wafer shipments.

The tech business reported a loss before tax of RM25.72 million, as opposed to a profit before tax (PBT) of RM85.66 million previously.

The group's energy business was affected by a lower net average selling price of Brent crude oil of US$74.7 per barrel (/bbl) during the quarter, compared with US$115.01/bbl previously, which resulted in PBT dropping about 30% to RM22.4 million, from RM31.97 million.

The conclusion of some projects in its IT segment also led to a 22.6% drop in PBT to RM21.89 million, from RM28.26 million.

Source: The Edge

https://theedgemalaysia.com/node/680476

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Hibiscus, Ping each take up 42.5% stake in Rapid Oil's Fyne Field in Central North Sea

By Tan Choe Choe

Hibiscus Petroleum Bhd and Ping Petroleum UK Plc have each entered into a separate but identical farm-in agreement to take over 42.5% equity interest each in Licence P2451 from Rapid Oil Production Ltd. The remaining 15% in Licence P2451 will remain with Rapid Oil.

The licence holds an undeveloped oil field, Fyne Field, located in the Central North Sea, UK, with an estimated 75 MMboe STOOIP (stock tank oil initially in place). Upon completion of the proposed acquisition, Anasuria Hibiscus shall be appointed as operator of the field development.

"First oil is expected in 2026, whereupon Anasuria Operating Company Ltd (equally owned by Anasuria Hibiscus and Ping Petroleum) will take over as operator of the Fyne production from Anasuria Hibiscus".

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/680983

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Dnex proposes private placement to fund expansion

Based on an indicative issue price of 41.5 sen per share and a placement of some 320 million shares, as outlined in its filing, Dnex expects to raise about RM133.44mil.

Dnex had ventured into the upstream O&G segment in 2016, via the acquisition of a 30% stake in Ping Petroleum Ltd and had subsequently increased its stake in Ping to 90% as at its financial year ended June 30, 2022 (FY22).

In its FY22, Dnex’s O&G segment contributed about RM399.9mil or 27% of its total revenue of RM1.46bil.

“This is an increase of RM297.30mil as compared to the RM102.60mil recorded in FY21, reflecting the positive results of the group’s growth strategies and efforts in the O&G segment,” it added.

Dnex expects the proposed private placement to be completed by the final quarter of 2023.

Source: The Star

https://www.thestar.com.my/business/bus ... -expansion

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DNeX (41.5 sen) - Forming alliance for smart city venture

Announced it had entered into a JV Agreement with Zhongheguoji Construction Group Co. Ltd (CSI) to set up a JV enterprise (China JVE) to provide licenses and/or services to Chinese and international customers.

The JVE also allows DNeX to access technology and solutions from China in areas of smart city and artificial intelligence solutions, among others.

The registered capital of the JVE amounts to RMB20m (RM13.0m) will be funded by internally generated funds. DNeX will hold 60% stake of China JVE while CSI will own the balance 40%.

Recall that DNeX and Ajlan & Bros Holding Group (Ajlan & Bros) previously signed a JV agreement in Mar-23 to form an equally-owned JV (KSA JV) to carry out systems integration in smart cities and large enterprise projects in the MENA region.

Additionally, DNeX has also signed a collaboration agreement with both Ajlan & Bros and CSI to explore commercial opportunities in Saudi Arabia in offering smart city and other technology solutions.

In essence, both China JVE and KSA JV will work together for its venture in Saudi Arabia.

Saudi Vision 2030
The newly formed JV agreement with CSI and collaboration agreement between both JVs to be incorporated marks a continuation of DNeX’s venture into the MENA region by leveraging on technology solutions from China and Ajlan & Bros’s access to the MENA region.

This venture is in conjunction with the objectives of Saudi Vision 2030 as the kingdom aims to implement smart city projects across cities such as Makkah, Riyadh, Jeddah, Al-Madinah and Al-Ahsa, allowing DNeX to ride on the growing ICT spending in years to come from the kingdom.

Mildly positive
Brian is mildly positive on this development as DNeX is actively looking for avenues to expand its IT business by tapping its experience and expertise in serving the public sector in Malaysia.

Should the venture come to fruition, DNeX will predominantly be responsible for providing the technical know-how and providing ICT infrastructures and subsequent maintenance works.

Forecasts
Brian revamps model and re-visits assumption. He revised up FY23/24 EPS by 12.5%/3.3%
Note that he has not imputed this development into forecasts until some contract wins are announced.
Core net EPS (sen)
18MFY23 e : 5.1
FY24 f : 4.6
FY25 f : 5.7

Brian maintains BUY call on DNeX with SOP-derived TP of 72 sen pegging Silterra at a multiple of 16x.

DNeX is currently trading at about 9x revised FY24 PER.

Source: HLIB

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(DNEX MK, CP: MYR0.425, Not Rated; 12MH/L: MYR0.795/0.37)
Secured MYR18.1m project a boon but…

What’s new? Dagang NeXchange (DNeX) announced that its 100%-owned subsidiary Dagang Net Technologies S/B was awarded a MYR18.1m contract by the Port Klang Authority to supply, install, develop, integrate, commission, maintain and implement the Malaysia Maritime Single Window Phase 1 (MMSW) for the Ministry of Transport of Malaysia. The project is for a period of three years and six months, from 23 Oct 2023 to 22 Apr 2027.

Complimentary. MMSW is a unified digital platform that facilitate trade and shipping services at the national level. A central digital database will be developed to facilitate end-to-end information flow which in turn will serves as a one-stop portal through a single sign-on and single submission for maritime regulatory and port services transactions. In other words, this will complement DNeX’s existing National Single Window (NSW) system.

IT business is profitable. The latest development will help DNeX’s Information Technology (IT) division to remain relevant. In 12MFY23 (the group has changed its financial year end from 30 Jun to 31 Dec), the IT division contributed 11% of its PBT. Besides the NSW, DNeX also offers turnkey solutions for the design, engineering, supply, installation, and repair maintenance of marine fibre optic and power cables.

Energy is key. IT business aside, DNeX’s key earnings contributor is its Energy division, which accounted for 85% of 12MFY23 PBT. The still-resilient oil prices (Brent spot averaged USD82.32 YTD vs. USD99.85 in 2022) will spur activities across the O&G upstream and downstream sectors, which bodes well for its subsidiary OGPC Group. Likewise, the group is riding on Ping Petroleum’s strategy of diversifying its asset portfolio across geographical locations.

Tech hinges on Silterra. Notably, DNeX also has a Technology unit, which is primarily involved in the manufacturing of semiconductor wafers (under 60%-owned Silterra). Management, however, thinks that the semiconductor is now in a cyclical downturn, though its long-term growth prospects will be driven by new technologies in the artificial intelligence, IoT and 5G technology.

Valuation. DNeX’s key challenge is to return to profitability. The group reported a PATMI of MYR47.5m in 4QFY23 which was partly driven by a MYR22.9m tax credit, but still incurred a loss after tax of MYR118.7m in 12MFY23.

That said, brokers are bullish on the stock with two Buys and a mean target price of MYR0.65. At current price, the stock is trading at 9x FY24E consensus EPS. Investors should continue to monitor the upcoming quarterly earnings.

Source: Maybank IBG Retail Research

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DNeX 3QFY2023 net profit nears three-year low

By Justin Lim

Net profit of RM13.3 million on the back of a revenue of RM327.45 million. It was the lowest quarterly performance since 2021.

On a quarter-on-quarter (q-o-q) basis, the group posted a 72% drop in net profit from RM47.51 million in the immediate preceding quarter, 2QFY2023, despite revenue increased 19.1% q-o-q from RM275.02 million.

Lower contributions from the information technology (IT) segment and corporate segment.

IT segment’s profit before tax fell 26.17% to RM16.16 million, from RM21.89 million previously, while the corporate segment’s loss before tax widened to RM4.62 million, from RM4.16 million previously.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/691634

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DNeX secures RM11.17m two-year software maintenance contract from IRB

By Emir Zainul

Dagang NeXchange Bhd (DNeX) has secured a software maintenance and support contract from the Inland Revenue Board of Malaysia (IRB) for a period of two years, worth RM11.17 million.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/701969

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Positive outlook for DNeX

Operating loss of RM47.4mil for its technology division.

Dnex had acquired a 60% stake in Silterra from Khazanah Nasional Bhd for RM163.8mil.

Low-cost operator, profitability remains feasible as long as crude oil prices remain above US$60 per barrel.

Source: The Star

https://www.thestar.com.my/business/bus ... k-for-dnex