Kuala Lumpur (The Edge 14 Jul): Whilst software provider IFCA MSC Bhd has attracted attention as a beneficiary of the Goods and Services Tax (GST) that will be implemented next year, it is also banking on its China operations and maiden venture in educational services for future growth.

The ACE Market-listed company is one of those endorsed by the Royal Customs as certified vendors of accounting software for small and medium enterprises. It is worth noting that most of its clients are from the property sector and according to IFCA’s co-founder and group CEO Ken Yong, most of them have yet to upgrade their business software. This gives IFCA earnings visibility for at least the next two years, he says.

IFCA has an order book of RM53 million, and still growing, because only 40-50 of its near 1,000 local clients have signed up for an upgrade.Yong says this will keep the company busy for a year.”Conservatively, we expect double-digit growth this year,” he adds.

In its financial year 2013 ended Dec 31, IFCA made a net profit of RM1.73 million, or 0.4 sen per share, on revenue of RM52.01 million. This compares with the previous year’s net profit of RM3.48 million, or 0.8 sen per share, and revenue fo RM45.93 million.

The company was making losses from FY2007 to FY2011 as it tried to grab a slice of China’s property-related software market – which Yong estimates at RM1 billion a year.

It also undertook R&D and set up a research arm in China to revamp its product development as technology migrated to-web-based goods. Yong considers R&D continuous process because of the rapid advances in technology, but he says IFCA’s major investment stage has ended.” We were planting the seeds then; watered them, fertilised them…now, we’re going to enjoy the fruits.”

IFCA’s decision to focus on property development and management, including clubs and hotels, from its inception has made it a go-to name among industry players for business software and solutions. Moreover, it understood the intricacies of property sector.

“A lot of [the accounting] software out there is very good, but the solutions are general because they want to cater for various industries. Property is a unique industry. When using a generic software, property players will have to configure many things on their own,” explains Yong.

One of the complications for property players is that residential properties of properties are exempted from GST but not the other types of property. However,many of their projects in this country are mixed-use developments.

About 70% of the locally listed property developers are IFCA’s customers, including S P Setial Bhd, Eco World Development Group Bhd, IJM Land Bhd and Mah Sing Group Bhd.

Yong says the values of the company’s software ranges from RM50,000 to millions. IFCA also charges its customer 18% of the software’s value for annual maintenance service.

“Many solutions are integrated into one platform, so for customers seeking only one solution, it’s cheaper. But the full suite costs a lot more – as much as RM3 millions, ” Yong says.

While he expects IFCA to be inundated with orders of GST-compliant software over the next two years, he says the company is also looking for double-digit growth in its China operations, which have undergone a long gestation period.

“We’ve been in China for the past 10 years. Today, we are growing. We started a R&D centre a few years ago and continue to be big there,” he remarks.

The major investments notwithstanding, IFCA MSC was debt-free and had cash of RM28.38 million, or 6.31 sen per share, as at March 31, 2014.

“Our market share in China is probably just 5%. There is room to grow and revenue growth there can be in high double digits because of the sheer size of the market. In China, there are thousands of property development and property management companies,” Yong says.

Currently, 60% of IFCA’s revenue comes from Malaysia and the rest, China. However Yong expects contribution to be 50:50 in the next few years before China eventually overtakes Malaysia. IFCA also has operations in South Africa and Indonesia, but their revenue contribution is small.

Meanwhile, the company has entered the education sector, conducting seminars on GST for property players. It plans to conduct seminars on property-related subjects in the future.

“Education is continuing process. We plan to cater for not only professionals but also fresh gradudates and international students who want to be in the property industry,” Yong says.

He adds that company’s goal over the next five years is to become a globally recognized software provider and to be upgraded to the Main Market on Bursa Malaysia.