Innity aiming for more than 30% revenue growth

TheEdge Wed, Mar 21, 2018 03:00pm - 6 years View Original


ACE Market-listed Innity Corp Bhd saw its annual revenue cross the RM100 million mark for the first time in its financial year ended Dec 31, 2017 (FY2017), and despite a lower profit, the online advertising solutions provider remains motivated to grow its top line more than 30% in FY2018.

According to its director of corporate strategies, Chow Tat Kee, the group hopes to benefit from the upcoming FIFA World Cup as well as the imminent 14th general election (GE14), both of which are expected to boost the advertising expenditure (adex) of media companies.

“Based on last year’s numbers, we aim to achieve a revenue growth of more than 30% this year. With the FIFA World Cup and GE14 on the horizon, more advertising budget will be channelled through us,” Chow tells The Edge.

Innity’s revenue will be boosted further by the rollout of new products, including its latest premium programmatic direct offering, called Malaysia Premium Publishers Marketplace (MPPM).

“A private marketplace such as MPPM will definitely benefit from GE14 as they (political parties) would want to have video and mobile ads that reach the right audience,” Chow adds.

He points out that during the World Cup season, automotive and fast-moving consumer goods super brands, especially of coffee and instant noodles, tend to beef up their ad spending.

Coming back to its financials, Innity saw its revenue grow 6% year on year to RM101.62 million in FY2017, although its net profit declined 72% to RM1.21 million.

The increase in revenue was mainly contributed by its operations in Malaysia, followed by Taiwan, Singapore and newly incorporated companies in South Korea and Myanmar. Earnings dropped primarily due to higher operating expenses and losses from unfavourable foreign exchange rates.

Also, Innity’s subsidiary in Hong Kong faced problems in collecting overdue advertising fees amounting to RM2 million from customer LETV Sports Culture Develop (HK) Co Ltd. As a result, doubtful debts of a total of HK$3.849 million were provided for in the first quarter of 2017.

“LETV is currently facing some financial problems but it is in the midst of pumping in fresh capital. There’s still a chance for us to get our money back but we made a provision to prepare for the worst,” Chow explains.

“Our revenue has been growing every year in the last 18 years and our gross profit is not dropping either. Our bottom line should be much better in FY2018.”

Chow, 53, had joined Innity as its financial controller in 2005 and became the finance director three years later. He was redesignated to his current position in February 2013.

Established in 1999, Innity is a digital media company that offers interactive online marketing platforms and data-driven technologies for advertisers, advertising agencies and publishers in Asia.

Put simply, Innity is a mediator that bridges the buy side (advertisers and media agencies) and the sell side (digital media and website owners, also known as publishers) by creating a platform for them to buy and sell ad space.

Headquartered in Kelana Jaya, the group has operations in Malaysia, Singapore, Indonesia, Thailand, the Philippines, Hong Kong, Vietnam, Taiwan, Myanmar, Cambodia and South Korea, and has more than 300 employees.

Innity covers 15,000 websites, including major newspaper portals and premier sites in more than 18 content-interest channels, such as technology, lifestyle, automotive, business and entertainment.

Innity co-founder and managing director Fabian Looa Hong Tuan says he sees a lot of problems in the advertising industry that need to be solved, which is good for the group because it provides solutions.

Today, he says, Google and Facebook Inc have captured about 70% of the digital advertising market, not only in Malaysia but also in the world. Consequently, the publisher’s inventory became cheap as it was commoditised by the technology platform.

This is because Google and Facebook do not differentiate between premium and non-premium publishers, and sell their ad space at a similar rate.

“This is not right and we are trying to fix it. Imagine, premium publishers in Malaysia are now grouping together to give Innity their inventories so that we can sell them exclusively,” says Looa.

“This is a big thing that has never happened before. With MPPM, premium publishers will be able to enjoy the higher ad rates that they deserve.”

According to Looa, MPPM is expected to contribute 40% to Innity’s Malaysian revenue in FY2018 while the remaining 60% will come from the public marketplace and other various products. In FY2017, the Malaysian operation contributed RM42.8 million, or 42%, to the group’s revenue.

Looa, 48, who has helmed Innity since April 2008, is a substantial shareholder with a 7.87% stake. He started his career as the head of sales in Jebsen & Jessen, a Danish multinational video-conferencing, streaming and networking company.

Not many may be aware that locally listed JcbNext Bhd (formerly known as JobStreet Corp Bhd) is the second largest shareholder of Innity with a 21.13% stake. Tokyo-listed internet advertising agency, D.A. Consortium Inc, is the single largest shareholder with a 25.09% stake.

It is worth noting that Innity has been eyeing a transfer to the Main Market by this or next year. When the company is big enough, it might also consider a secondary listing on a foreign stock exchange. Although thinly traded, Innity’s shares have gained 8% year to date. The stock closed at 69 sen last Thursday, giving the company a market capitalisation of RM92.73 million.

The group’s executive chairman, Peter Phang Chee Leong, had reportedly said in 2016 that the Stock Exchange of Hong Kong was on the company’s radar screen. Chow acknowledges that Innity pushed back these targets by two to three years due to its lumpy earnings performance in recent years.

 

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