WHILE Eduspec Holdings Bhd has yet to see its investments in STEM (Science, Technology, Engineering and Mathematics) education churning out big money as its founder Lim Een Hong envisaged, the company has nonetheless attracted the interest of a foreign education group.
Eduspec is currently in advanced talks with a strategic investor, according to Lim, who is also the CEO. Should the discussions bear fruit, the foreign education group will emerge as a substantial shareholder.
“There will be a significant amount of investment [coming from the potential shareholder]. It’s strategic because the group is also in the education sector and it is a huge organisation but has no presence in this region yet,” Lim tells The Edge in an interview recently.
Eduspec’s key attraction is likely its exclusive distribution rights and its right to appoint resellers to distribute the STEM education products offered by iCarneigie Global Learning LLC in most Asean countries, including Malaysia, Singapore, Indonesia, the Philippines, apart from China, Hong Kong, Taiwan, South Korea and India.
“It (the foreign investor) wants to have exposure to Asia,” says Lim, who holds a 17.71% stake.
Eduspec recently established a foothold in China. It signed a framework agreement in June appointing Beijing ZhongChuang HuaYing Technology Co Ltd (BZC) to promote and distribute the Carnegie Mellon University Robotics Academy (CMRA) certified STEM Robotics curriculum in China.
Under the agreement, BZC will be the exclusive distributor in China for five years starting in June 2018, at a total contract value of US$15 million (RM64.36 million) which can be the base for now. “Later, if they need more advance products, the consortium will have to pay us more,” says Lim.
China is a clearly big market for Eduspec to tap into. Already, the company is in talks for a second contract with its Chinese counterparts for STEM with a computer science programme.
“We’re also looking for opportunities in India, Taiwan and South Korea,” says Lim.
For non-Asean countries, Eduspec will only distribute the STEM Robotic products to the local players for an agreed fee. It does not operate in these markets, such as China, India or Taiwan.
Currently, Eduspec has operations in Indonesia, the Philippines, Thailand, Singapore and Malaysia.
Great potential, slow take-up
While STEM education has been made a national agenda in many Asian countries including Malaysia, the pace of adoption is rather slow, Lim says.
“It’s taking longer than we had expected. The first year is very much [about raising] awareness of what STEM education is all about. In fact, we are the first ones to bring the STEM concept to this region,” he says.
Eduspec ventured into STEM education in 2014 after it signed a collaboration agreement with iCarnegie.
Of the 600 Chinese schools in Malaysia that provide computer classes, Lim says, half of them are using Eduspec’s programme. “Now, the plan is to convert them to STEM [programme]. Everything that has to do with ICT or robotics, we are converting it to STEM.”
Last year, only 20 out of 300 schools converted their ICT classes to STEM. The small take-up is attributed to the schools’ having to raise funds to kick-start the STEM programme.
The slow adoption rate is reflected in Eduspec’s financial performance. For the financial year ended Sept 30, 2016 (FY2016), net profit plunged 56.5% y-o-y to RM4.26 million. Revenue, however, grew 7.2% at RM81.46 million.
The home market contributed 53.6% of sales while Indonesia and Singapore contributed nearly 29% and 17.4% respectively.
Because of the weak earnings, Eduspec’s share price has been drifting downwards over the past two years to 14 sen currently, the lowest since November 2013.
Nonetheless, the adoption rate is gaining momentum. Lim says some 100,000 students are participating in the STEM programme this year compared with around 20,000 last year. He expects the figure to hit 300,000 next year. The company has seen strong growth in the Philippines.
In fact, its business in the Philippines is projected to contribute more this year — within 11/2 years, the STEM programme is being used by 60,000 students and over 40 schools in the archipelago.
Lim notes that the revenue from the Philippines is in the form of royalty income. For FY2016, Eduspec posted royalty income of RM984,564, more than six times the total in the year before.
Better earnings prospects ahead?
With the growing number of students in the programme, Lim is positive better earnings will be flowing in soon.
“We are now doing the training in full scale. So, we will see much better revenue and profit margin from this [STEM] business moving forward,” he says.
On whether the company is expected to be profitable in FY2017, he says, “We always believe that we will be profitable because it is always a [product] cycle [that we need to go through now]. We are restructuring some of our businesses and we are also hoping to monetise more
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Posted by phoenixqueen > 2017-07-13 10:21 | Report Abuse
i hope all here has sold ytd ,no one got trapped