KUALA LUMPUR (June 19): ACE Market-listed digital media company Innity Corp Bhd is no stranger to the advertising industry in the region, but its shares were never really on the radar screen of investors until recently.

The often thinly-traded shares of Innity had more than doubled last week, from 46.5 sen on Monday to an all-time high of 96 sen on Thursday, before it pared some of its gains on Friday. At the closing of 78 sen on Friday, Innity had a market capitalization of RM108.7 million.

Its trading volume soared to 11.65 million on Thursday — the highest level ever seen — from 2.749 million shares on Wednesday.

Coincidentally, Main Market-listed JcbNext Bhd — the second largest shareholder of Innity with a 20.982% stake — also saw its share price shoot up last week.

The counter, formerly known as JobStreet Corp Bhd, jumped 30% to RM1.69 on Thursday, up from RM1.30 on Wednesday. It came off the peak to close at RM1.59 on Friday, JcbNext’s market capitalisation stood at RM210.2 million.

Responding to an unusual market activity (UMA) query issued by Bursa Securities on Thursday, Innity said it was not aware of any corporate development, rumour or report concerning its business that would have accounted for the UMA.

When contacted by The Edge, Innity co-founder and managing director Fabian Looa Hong Tuan said he has been checking and he is still trying to find out who were involved in the share transactions lately.

“We are wondering why (the share price shot up) as well. Frankly, I don’t have the details at the moment. Our trading volume and share price are at historical highs. I have never seen anything quite like this before. I would like to think that the investors who bought our shares lately are serious about our company’s businesses,” he said over the phone.

According to Innity’s annual report 2020, Looa is the group’s fourth largest shareholder with an 8.876% stake as at March 22. The 50-year-old, who started his career as head of sales department in Danish multinational company Jebsen & Jessen, co-founded Innity in 1999.

Notably, the other three major shareholders are Tokyo-listed internet advertising agency DA Consortium Inc (24.917%), JcbNext (20.982%), and Peter Phang Chee Leong (9.538%).

Phang, 50, is the executive chairman and co-founder of Innity. He started his career as a software engineer in industrial automation firm PC Automation Sdn Bhd.

Looa did not rule out the possibility of a hostile takeover.

“It is possible, but it could also be internal parties. If you look at Innity’s shareholding structure, it is quite complicated and fragmented. If someone wants to take control of the company, it is possible.

“I can’t speak for other shareholders, but I do not intend to do so. The company is in a good position today, we are rolling out new products, and the advertising industry has been recovering well,” he elaborated.

For the first quarter ended March 31, 2021 (Q1 FY2021), Innity reported a minimal net profit of RM184,000 against a net loss of RM3.33 million a year ago. Its quarterly revenue also grew to RM25.87 million from RM21.31 million.

“Advertising is seasonal in nature. Over the years, our company has not performed well in the first two quarters of the year. We would make some losses in the first quarter, and then we would slowly catch up and break even in the second quarter,” Looa commented.

He explained that it is usually the low season in the first half of the year.

That said, surprisingly, the company achieved better growth in 1Q FY2021, despite the impact of Covid-19.

“We are already profitable in 1Q FY2021. Maybe that could be the reason why someone is buying up our shares,” Looa explained.

According to him, the Covid-19 pandemic has reduced the competition  as its rivals in the region have been phasing out since the outbreak.

“If you look at Innity’s regional businesses, we have been competing with the American technology and US products. But today, due to the travel restrictions, a lot of expats have not been able to ‘return’ to Singapore and other Asian countries. The pandemic created this vacuum of expats, and suddenly, some foreign brands just totally disappeared. Therefore, we see less market competition nowadays,” Looa observed.

He added that Innity is fortunate that the group has been relying on local talents including in Singapore, Hong Kong and Malaysia.

In April, Innity had been appointed as Spotify’s official local advertising sales partner in Hong Kong. Spotify is a New York-listed audio streaming subscription service provider founded in 2006 by Swedish billionaire Daniel Ek.

Through this partnership, Innity’s advertisers will have the opportunity to reach millions of engaged listeners on Spotify’s ad supported free tier through a diverse selection of unique ad experiences, including audio ads, leaderboards, overlays, video takeovers, and sponsored playlists across multiple channels such as mobile, desktop, connected speakers and gaming consoles.

Looa, however, played down the financial impact from the partnership with Spotify.

“Spotify appointed resellers in most of the markets, but their regional head office is in Singapore. To us, they are just another partner. The earnings contribution to our group will not be significant. But in business, when you put a sellable product in a shop, you could attract more buyers,” he said.

“We are looking at market exposure. For instance, McDonald’s and Ikea sell ice-cream, it is not the most profitable product for them, but it could attract a crowd. We are expecting the similar effect when we collaborate with Spotify,” Looa concluded.