Thinly-traded Edaran surges a third after landing RM357 mil MOF contract

KUALA LUMPUR (Jan 3): Little-traded Edaran Bhd rose as much as 29.5 sen or 32.24% to hit a more than two-decade high of RM1.21 on Wednesday (Jan 3) after its unit bagged a RM356.56 million contract from the Ministry of Finance (MOF).

The contract was particularly sizeable for the company given its small market capitalisation of only RM73 million.

Shares in Edaran rose as much as 29.5 sen or 32.24% to an intra-day high of RM1.21 after the opening bell from Tuesday”s closing price of 91.5 sen, putting it among the top gainers on Bursa Malaysia.

At 4.15 pm, the stock was trading at RM1.21 — a level not seen since 2002 — and briskly traded with a total of 6.57 million shares changing hands. Trading volume was 88% higher than Tuesday’s 3.49 million shares.

Edaran on Tuesday said its wholly-owned Edaran IT Services Sdn Bhd secured a RM356.56 million contract to provide hardware and software rental services to the Royal Malaysian Customs Department. The contract is for 48 months.

“Proceeds from the contract shall contribute towards the earnings of the group for the financial year ending June 30, 2024 (FY2024) until June 30, 2028 (FY2028),” it said.

Edaran’s substantial shareholders are Valiant Chapter Sdn Bhd, with a 23.8% stake, Kauthar Sdn Bhd (8.17%) and Unique Pyramid (7.93%).

Valiant Chapter is wholly owned by Zamri Samsuddin, while Unique Pyramid is owned by Ruzila Ab Kadir, according to checks with the Companies Commission Malaysia.

Kauthar, meanwhile, is 95%-owned by Edaran’s founder and previously prominent corporate figure Tan Sri Tajudin Ramli, while the remaining 5% is held by his spouse Puan Sri Faridah Abdullah. Tajudin’s son, Fazlan Azri Tajudin, sits on the Edaran board as an executive director.

Earnings wise, the company posted a net profit of RM271,000 for the first quarter ended Sept 30, 2023 (1QFY2024), against a net loss of RM971,000 a year ago, as revenue increased by 80% to RM20.44 million from RM11.31 million previously.