Sistem Pengurusan Sekolah (SPS), or school management system project, which The Media Shoppe Bhd and Theta Edge Bhd are jointly proposing to the government, is estimated to be worth around RM350 million, according to a source familiar with the matter.
Theta Edge said in its reply to Bursa Malaysia’s query last Thursday that the estimated value of the project, profit margin and revenue and profit sharing ratio between the two parties are still being discussed. Similarly, The Media Shoppe told the stock exchange that the project value and profit sharing arrangement with Theta Edge have yet to be determined.
Theta Edge did indicate that if its wholly-owned subsidiary Konsortium Jaya Sdn Bhd (KJSB) is awarded the project, it would have a material impact on the group’s earnings.
In its Jan 19 announcement to Bursa Malaysia, Media Shoppe said its wholly-owned subsidiary TMS Software Sdn Bhd had entered into a teaming agreement with KJSB to submit their proposal for the SPS project to the government.
KJSB, which provides sales and maintenance of computers and telecommunications equipment, peripherals and related services, is the main contractor in this project. If it is awarded the project, it will appoint TMS as subcontractor for the implementation stage.
“The project proposed to the Ministry of Education (MoE), which will take about three years to implement in 10,000 schools, is estimated to be worth RM350 million. The expected margin is quite high,” said the source.
If the project is secured, it could give the two companies’ earnings a major lift.
Theta Edge and The Media Shoppe have a combined market capitalisation of RM244.6 million and were loss-making in the first nine months of last year.
Theta Edge has a market capitalisation of RM65.42 million. Its revenue for FY10 ended Dec 31 was RM86.2 million and its net loss RM4.3 million. For the nine months to Sept 30, 2011, the company posted a net loss of RM10.51 million on revenue of RM42.44 million.
The Media Shoppe’s market capitalisation stood at RM179.2 million. Its revenue for FY10 ended Dec 31 was RM10.2 million and its net profit RM2.2 million. For the nine months to Sept 30, 2011 though, the company slipped into the red, with a net loss of RM3.7 million on revenue totalling RM2.63 million.
The RM350 million project is apparently a milestone for both companies but it should be noted that it is not yet in the bag. It is also unclear if the government will open up the SPS project for tender by other parties.
As such, investors betting on it becoming a reality for the two companies could be taking a risky bet, especially after the sizable gains last week.
“There is currently no call for tender and the expected date of submission of proposals to the government for the project is not fixed,” The Media Shoppe clarified to the stock exchange last Thursday. “We have successfully implemented the pilot project in 88 schools and have the technical knowledge, experience, software resources and necessary expertise for the same area.”
Theta Edge, a subsidiary of Tabung Haji group, told Bursa in its reply that KJSB had only started working with TMS on the preparation of the proposal. It added that the expected financing requirements and/or sources of funding for the project and sub-contract agreement had yet to be finalised.
It also pointed out that no deposit, performance bond or tender fee had been paid for the teaming agreement with TMS, and no date was set for the submission to the MoE.
“As far as Theta Edge is aware, there is no specific time frame for the MoE to revert on the outcome of the proposal,” said the company.
The SPS is a system that manages day-to-day school operations such as student registration, subjects, extra curricular activities, examinations and staff. It also acts as a communication channel for teachers, students, parents and the MoE, according to the source.
Theta Edge outlined the roles of KJSB, which include hosting, creating and submitting the proposal and subsequent correspondence with the MoE. It will also consult with TMS on the preparation, creation, submission of the proposal and communication with the MoE.
To this end, TMS will also prepare and submit to KJSB part of the proposal with regard to its services that include its roles, responsibility and fees.
The Media Shoppe’s share price tripled in the past week alone after news of the project broke.
After Bursa issued an unusual activity query on Jan 19, the company announced the tie-up with Theta Edge on the same day, and requested a suspension of the shares on Jan 20 which closed at 34 sen.
The counter resumed trading last Friday to close at 37.5 sen, up 3.5 sen but off an intra-day high of 45 sen. Before last week’s rally, its shares were trading below 10 sen.
Theta Edge’s shares also rallied, but by a smaller margin. The stock shed 2.5 sen to 61 sen last Friday, and rose 30% from 47 sen before the market closed for the lunar new year holidays.
However, with no certainty if the proposal will be accepted by the government, and with no fixed timeline, an analyst advocates caution at this juncture.
As a yardstick, net assets per share of The Media Shoppe and Theta Edge stood at six sen and 82 sen respectively as at Sept 30, 2011.
This article appeared in The Edge Financial Daily, January 30, 2012.
Theta Edge said in its reply to Bursa Malaysia’s query last Thursday that the estimated value of the project, profit margin and revenue and profit sharing ratio between the two parties are still being discussed. Similarly, The Media Shoppe told the stock exchange that the project value and profit sharing arrangement with Theta Edge have yet to be determined.
Theta Edge did indicate that if its wholly-owned subsidiary Konsortium Jaya Sdn Bhd (KJSB) is awarded the project, it would have a material impact on the group’s earnings.
In its Jan 19 announcement to Bursa Malaysia, Media Shoppe said its wholly-owned subsidiary TMS Software Sdn Bhd had entered into a teaming agreement with KJSB to submit their proposal for the SPS project to the government.
KJSB, which provides sales and maintenance of computers and telecommunications equipment, peripherals and related services, is the main contractor in this project. If it is awarded the project, it will appoint TMS as subcontractor for the implementation stage.
“The project proposed to the Ministry of Education (MoE), which will take about three years to implement in 10,000 schools, is estimated to be worth RM350 million. The expected margin is quite high,” said the source.
If the project is secured, it could give the two companies’ earnings a major lift.
Theta Edge and The Media Shoppe have a combined market capitalisation of RM244.6 million and were loss-making in the first nine months of last year.
Theta Edge has a market capitalisation of RM65.42 million. Its revenue for FY10 ended Dec 31 was RM86.2 million and its net loss RM4.3 million. For the nine months to Sept 30, 2011, the company posted a net loss of RM10.51 million on revenue of RM42.44 million.
The Media Shoppe’s market capitalisation stood at RM179.2 million. Its revenue for FY10 ended Dec 31 was RM10.2 million and its net profit RM2.2 million. For the nine months to Sept 30, 2011 though, the company slipped into the red, with a net loss of RM3.7 million on revenue totalling RM2.63 million.
The RM350 million project is apparently a milestone for both companies but it should be noted that it is not yet in the bag. It is also unclear if the government will open up the SPS project for tender by other parties.
As such, investors betting on it becoming a reality for the two companies could be taking a risky bet, especially after the sizable gains last week.
“There is currently no call for tender and the expected date of submission of proposals to the government for the project is not fixed,” The Media Shoppe clarified to the stock exchange last Thursday. “We have successfully implemented the pilot project in 88 schools and have the technical knowledge, experience, software resources and necessary expertise for the same area.”
Theta Edge, a subsidiary of Tabung Haji group, told Bursa in its reply that KJSB had only started working with TMS on the preparation of the proposal. It added that the expected financing requirements and/or sources of funding for the project and sub-contract agreement had yet to be finalised.
It also pointed out that no deposit, performance bond or tender fee had been paid for the teaming agreement with TMS, and no date was set for the submission to the MoE.
“As far as Theta Edge is aware, there is no specific time frame for the MoE to revert on the outcome of the proposal,” said the company.
The SPS is a system that manages day-to-day school operations such as student registration, subjects, extra curricular activities, examinations and staff. It also acts as a communication channel for teachers, students, parents and the MoE, according to the source.
Theta Edge outlined the roles of KJSB, which include hosting, creating and submitting the proposal and subsequent correspondence with the MoE. It will also consult with TMS on the preparation, creation, submission of the proposal and communication with the MoE.
To this end, TMS will also prepare and submit to KJSB part of the proposal with regard to its services that include its roles, responsibility and fees.
The Media Shoppe’s share price tripled in the past week alone after news of the project broke.
After Bursa issued an unusual activity query on Jan 19, the company announced the tie-up with Theta Edge on the same day, and requested a suspension of the shares on Jan 20 which closed at 34 sen.
The counter resumed trading last Friday to close at 37.5 sen, up 3.5 sen but off an intra-day high of 45 sen. Before last week’s rally, its shares were trading below 10 sen.
Theta Edge’s shares also rallied, but by a smaller margin. The stock shed 2.5 sen to 61 sen last Friday, and rose 30% from 47 sen before the market closed for the lunar new year holidays.
However, with no certainty if the proposal will be accepted by the government, and with no fixed timeline, an analyst advocates caution at this juncture.
As a yardstick, net assets per share of The Media Shoppe and Theta Edge stood at six sen and 82 sen respectively as at Sept 30, 2011.
This article appeared in The Edge Financial Daily, January 30, 2012.
