SMR has been listed on the ACE Market (previously known as the MESDAQ Market) of Bursa Malaysia since March 2006. The SMR Group, founded by Dato’ Dr. R Palan, was established in 2001 although its flagship software product, HRDPower™, has a longer history where it was first developed in 1998 by Dato’ Dr. Palan. SMR started initially as a HR competency management solutions and HR outsourcing services Group that operates on the HRDPower™ software system. Over the years, SMR’s scope of offerings has expanded rapidly and today, its products and services encompass the areas of Learning & Development, Learning Resources, Consultancy, Outsourcing, Events, Talent Search, as well as Software and Technical Services.
Dato’ Dr. Palan continues to helm SMR as the Chairman and Chief Executive Officer. Being an internationally recognized HR expert and an author of 12 books on HR-related subject, he also serves as the brand ambassador for the Group.
SMR Tech is an integrated HR solutions provider offering comprehensive products and services ranging from software, consulting, outsourcing, learning and talent search. Its solutions focus on the strategic HR development aspect rather than the transactional aspect such as payroll or timekeeping.
Turnaround story. SMR was adversely affected during the 2008/09 credit crisis which coincided with its mistimed expansion into the US market, resulting in the Group suffering losses in FY08 and FY09. However, it has since exited the US market, and shifted its focus to the ASEAN and Middle East regions. The realignment efforts paid off with SMR returning to the black in FY10.
Growth catalysts. SMR clinched a 3-year project worth RM89.5 mln in September 2010 from the MOE in Malaysia (ELT Project). This project is significant as it propels the Group’s revenue base to the next level while lifting earnings back to pre-crisis level. Additionally, earnings contributions from the ASEAN and Middle East markets are on the rise too.
In terms of shareholdings, substantial shareholders in SMR are Special Flagship Holdings Sdn Bhd (38.2%) in which Dato’ Dr Palan is a major shareholder, and Fikir Wawasan Sdn Bhd (15.9%).
Business
SMR provides a comprehensive range of HR development (HRD) solutions, as illustrated in the table below:
The SMR Group focuses on the strategic aspects of human capital development such as competency issues, performance management and training, instead of the operational matters of HR, i.e. payroll system, staff leave management or time keeping where competition is more intense.
Central to SMR’s offerings is its in-house proprietary software platform, HRDPower.net system (HRDPower™), which is available as installed applications as well as Software as a Service (SaaS).
Solutions available under HRDPower™ include:-
• Integrated Competency-based HR Management;
• Entreprise Performance Management;
• Talent Management;
• Succession Planning and Career Development; and
• Enterprise Dashboards.
SMR has worked with over 2,000 companies from various industries across 30-odd countries worldwide. Some of its key local clients include Ministry of Education (MOE), Petronas, Giant, PLUS, Mudajaya Group, Perodua, Murphy Oil Corporation, OSRAM Opto Semiconductors, SHARP and DST Group, to name a few.
Meanwhile, its current overseas clients are Abu Dhabi Polymers Company Ltd (Borouge) in UAE, Rabigh Refining And Petrochemical Company (Saudi Arabia), Ministry of Works (Bahrain), Authority for Info-Communications Technology Industry (Brunei), and Petrodar Operating Company (Sudan).
In the past 12 months alone, SMR has successfully clinched a number of projects both in Malaysia as well as overseas, with a combined contract value in excess of RM95 mln. These major recent wins are listed below:-
Contract for Consultancy for Competency and Talent Management Project
Abu Dhabi Polymers Company Ltd (Borouge) UAE / RM4.275m
Competency Assessment Project Contract
Rabigh Refining And Petrochemical Company Saudi Arabia RM1.47m
Direct recruitment and management of ELT Consultants and implementation of In-Service Teachers Training for English Language Teachers
Ministry of Education Malaysia RM 89.5m
Succession Management System
Ministry of Works Bahrain Bahrain / RM 819,000
The most notable contract is the Recruitment and Management of ELT Consultants and Implementation of In-Service Teachers Training for English Language Teachers (ELT Project) awarded to SMR by the MOE in September 2010 that amounts to RM89.5 mln. This is the single largest contract bagged by SMR todate. The 3-year project, which SMR won via open tender, involves recruiting and managing up to 120 ELT Consultants to implement In-Service Teachers Training for English Language Teachers for Central and North Malaysia. All ELT Consultants have already been recruited and deployed, and the implementation of the programme is currently progressing on schedule.
Results:
For the quarter ended Sep 2011:
SUMMARY OF KEY FINANCIAL INFORMATION |
30/09/2011 |
INDIVIDUAL PERIOD | CUMULATIVE PERIOD | ||||
CURRENT YEAR QUARTER | PRECEDING YEAR CORRESPONDING QUARTER | CURRENT YEAR TO DATE | PRECEDING YEAR CORRESPONDING PERIOD | ||
$$'000 | $$'000 | $$'000 | $$'000 | ||
| 1 | Revenue | 10,713 | 2,754 | 30,148 | 6,115 |
| 2 | Profit/(loss) before tax | 2,321 | 49 | 5,452 | -1,466 |
| 3 | Profit/(loss) for the period | 2,266 | 36 | 5,374 | -1,505 |
| 4 | Profit/(loss) attributable to ordinary equity holders of the parent | 2,266 | 32 | 5,372 | -1,505 |
| 5 | Basic earnings/(loss) per share (Subunit) | 1.48 | 0.02 | 3.52 | -1.04 |
| 6 | Proposed/Declared dividend per share (Subunit) | 0.00 | 0.00 | 0.00 | 0.00 |
AS AT END OF CURRENT QUARTER | AS AT PRECEDING FINANCIAL YEAR END | ||||
| 7 | Net assets per share attributable to ordinary equity holders of the parent ($$) | 0.2150 | 0.1863 | ||
| Date | Open | Range | Close | Change | Volume |
|---|---|---|---|---|---|
| 09/02/2012 | 0.26 | 0.25 - 0.27 | 0.265 | +0.005 (1.92%) | 2,210,400 |
| 08/02/2012 | 0.25 | 0.25 - 0.26 | 0.26 | +0.01 (4.00%) | 1,525,700 |
| 03/02/2012 | 0.25 | 0.24 - 0.26 | 0.25 | 0.00 (0.00%) | 2,293,000 |
| 02/02/2012 | 0.235 | 0.24 - 0.26 | 0.25 | +0.015 (6.38%) | 4,502,700 |
| 31/01/2012 | 0.23 | 0.235 - 0.245 | 0.235 | +0.005 (2.17%) | 3,555,200 |
| 30/01/2012 | 0.235 | 0.23 - 0.24 | 0.23 | -0.005 (2.13%) | 2,151,400 |
| 27/01/2012 | 0.24 | 0.23 - 0.24 | 0.235 | -0.005 (2.08%) | 4,154,000 |
| 26/01/2012 | 0.225 | 0.225 - 0.24 | 0.24 | +0.015 (6.67%) | 2,871,700 |
As one can see from the price and volume traded, its rise has been on the quiet side, a ripe candidate for value momentum investing.
For the full year of 2011, the company is on track to record net profits of RM8m, what a turnaround, that translates to around 5 sen EPS, and the shares are still just 26 sen. Looking at the ongoing projects, the company is secured for the next 3 years at least. What has not caught the attention of investors is that for 2012, the company will be making at least RM14m net profit of an EPS of 8.75 sen. That drives the current PER to less than 4x.
Is the current run a reflection of astute buying by investors who have done their research early or an indication of possibly some positive corporate exercise. Either way, the shares have few reasons to be below 40 sen. Word has it that the company is very likely to obtain another RM200m contract from the Malaysian government via open tender after having done so well implementing the existing government contract. Certainly a company that is going places.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. I may already have shares in the above mentioned stock/s. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
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