Homegrown integrated telecommunications and digital services provider REDtone Digital Bhd outperformed its industry peers again on return on equity (ROE) in the past three years.
According to The Edge Malaysia Centurion Club Corporate Awards methodology, REDtone’s average weighted ROE of 15.4% between financial years 2020 and 2022 was the highest among the member companies in the utilities, telecommunication and media sector, bagging the company another Centurion sectoral corporate award this year.
The company saw its ROE improve significantly from 4.1% in FY2020 ended June 30 to 15.5% in FY2021, and further to 19.9% in FY2022.
Last year, REDtone bagged two awards at The Edge Malaysia Centurion Club Corporate Awards 2022 for highest ROE and highest profit after tax (PAT) growth over three years.
Although REDtone failed to retain its award on highest profit growth this year, its earnings continued to grow steadily.
In fact, the company’s adjusted three-year profit compound annual growth rate (CAGR) of 21.6% between FY2019 and FY2022 was much higher than its three-year profit CAGR of 12% between FY2018 and FY2021 that bagged it the award for highest PAT growth last year.
While REDtone’s net profit declined from RM19.3 million in FY2019 to RM6.6 million in FY2020, its bottom line made a strong rebound to RM26.3 million in FY2021 and strengthened further to RM39.5 million in FY2022.
During the evaluation period of March 31, 2020, to March 31, 2023, for The Edge Malaysia Centurion Club Corporate Awards 2023, REDtone’s stock price almost doubled from 26.4 sen (adjusted) to 51.5 sen. At the time of writing on Aug 25, the counter reached 67.5 sen, giving REDtone a market capitalisation of RM521.7 million.
REDtone was founded in 1996 and listed on Mesdaq — now known as the ACE Market of Bursa Malaysia — in 2004. The company migrated to the Main Market on May 24 this year.
In a press statement in May, REDtone group CEO Lau Bik Soon said the Main Market listing would power up the group’s market presence and growth, especially in the Managed Telco Network Services (MTNS) segment as well as telecommunications solutions for the enterprise market.
“The MTNS segment is expected to remain the main contributor for the group amid the ongoing large-scale telecommunications infrastructure projects, such as the Jendela (Jalinan Digital Negara) programme and the 5G (fifth generation) rollout,” Lau said.
He said that REDtone would pursue growth in the booming telecommunications segment, given the exponential growth in demand for reliable connectivity, intelligent Internet Protocol (IP) telephony and collaboration tools, in line with an increasingly digitalised economy.
“We are also constantly exploring new technologies, with the aim of developing new services and revenue streams, to deliver strong and sustainable growth,” he said.
REDtone also sees huge potential in technology-driven solutions, such as smart farming, which has been enjoying an encouraging take-up rate.
“As one of the leaders in the space, the company aims to continue working with government agencies, forestry and agriculture policymakers within the country and across the region, to address the challenges faced in food security, farm management, forest asset management, monitoring habitat loss and deforestation,” Lau added.
REDtone has been a subsidiary of Berjaya Corp Bhd (BCorp) — a local conglomerate controlled by Berjaya Group founder Tan Sri Vincent Tan Chee Yioun — since 2015. BCorp is the single-largest shareholder of REDtone, with a majority stake of 47.46%.
The Sultan of Johor, Sultan Ibrahim Sultan Iskandar, is the second-largest shareholder in REDtone with a 17.34% stake. Both Tan and Sultan Ibrahim are also major shareholders of unlisted mobile network operator U Mobile Sdn Bhd.
Source: The Edge Malaysia