Positive outlook for Dnex | The Star

PETALING JAYA: Despite recording its lowest net profit in three years, Dagang Nexchange Bhd (Dnex) remains optimistic about its future prospects backed by the global semiconductor market recovery, favourable oil prices and potential strategic collaborations.

Its executive chairman Tan Sri Syed Zainal Abidin said Dnex will be strategically positioning itself in emerging sectors and opportunities that have the potential to deliver outsized value for the group, all while spurring growth.

“Looking back on the past 18 months, it is an unmistakable fact that, largely due to external factors, our financial performance did not meet the high expectations that we have set for ourselves.

“With that said, I wish to re-emphasise the confidence that I share that brighter days are around the corner,” he said in the company’s 2023 annual report.

After suffering an operating loss of RM47.4mil for its technology division, Dnex believes it is crucial to exercise patience and prepare to seize opportunities during the anticipated upswing, as demand is expected to rebound in the latter half of 2024 driven by the recovery of personal computer and smartphone demand.

Additionally, Dnex also views opportunities in anticipation of the recovery of the global semiconductor market, driven by increasing demand for artificial intelligence (AI) and high-performing computing or HPC, coupled with stabilising demand in key sectors.

“Simultaneously, our substantial investment in the development of micro-electromechanical systems and silicon photonics is poised to yield positive results in the near future.

“As the demand for these emerging technologies continues to rise steadily, we are well-positioned to capitalise on growth opportunities driven by the surge in AI, electric vehicles and advanced medical technologies,” it said.

Syed Zainal said Dnex is currently undergoing product testing and qualification with its global customers as an effort to capture opportunities, supported by an expansion of Silterra Malaysia Sdn Bhd’s capacity.

Dnex had acquired a 100% stake in Silterra from Khazanah Nasional Bhd for RM273mil.

Meanwhile, as its energy segment is heavily reliant on the fluctuating oil prices, continuing favourable oil prices is expected to provide stability for its operation at the Anasuria cluster in the North Sea.

Dnex said it anticipates Brent crude oil price will average US$82 per barrel in 2024 and US$79 per barrel in 2025.

“Given our status as a low-cost operator, profitability remains feasible as long as crude oil prices remain above US$60 per barrel,” it added.

The group stated that it will also be collaborating with its 90%-owned subsidiary, Ping Petroleum Sdn Bhd, to drive progress in its United Kingdom-based endeavours, especially for the development of the Avalon and Fyne fields.

Syed Zainal then stated that Dnex had secured three production-sharing contracts, namely, for the Meranti Cluster, A Cluster and Abu Cluster, with Petroliam Nasional Bhd (PETRONAS) under the Malaysia Bid Round 2022 (MBR 2022), via Ping.

Hence, Dnex’s main priority is to reactivate the Abu Cluster, in which it holds a 100% interest, whereby it is expected to commence production by early 2025 with a volume of 2,500 barrels per day.

Once completed, the group will proceed to move onto developmental plans for the Meranti cluster.

“While these fields will take time and considerable investment to develop and monetise, they offer strong upside potential and, most importantly, enable us to focus our business within a more favourable market that is oriented towards growth in the oil and gas sector.

“We have also submitted further bids for more Malaysian fields as part of PETRONAS MBR+ in the sixth quarter of the period under review, with the awarding of these tenders expected to be announced in the second half of 2024,” he added.

Dnex also foresees opportunities for OGPC Sdn Bhd, as PETRONAS aims to sustain and grow Malaysia’s oil and gas production to two million barrels of oil equivalent per day by 2025.

That being said, OGPC will move on to pursuing various general maintenance and pipeline maintenance tenders.

As for its information technology (IT) division, Dnex said it is actively expanding its collaboration as an effort to strengthen its ability to provide end-to-end IT solutions.

The group will also be expanding its pipeline of large-scale IT projects in public and private sectors, both domestically and internationally.

“We are keeping a close eye on the Malaysian government’s ongoing emphasis to digitalise its services and adopt modern systems.

“As one of the few local companies equipped with the necessary experience and infrastructure, we are poised to leverage our expertise and established relationships to bid for digital transformation projects across various government ministries,” it stated.

Dnex is also looking forward to opportunities in collaboration with partners from China and Saudi Arabia, Zhongheguoji Construction Group and Ajlan & Bros Holding Group, particularly in the Middle East and North Africa region.

Syed Zainal added that he is actively working to further Dnex’s partnership with Ajlan and leveraging on Saudi Arabia’s development plans.

He stated that this will concurrently position Dnex as an international player in IT and open doors to even more “blue ocean” opportunities ahead.