Encouraging outlook for Dnex in Middle East and North Africa

PETALING JAYA: Hong Leong Investment Bank (HLIB) Research says it is mildly positive on Dagang Nexchange Bhd’s (Dnex) venture into the Middle East and North Africa (Mena) region by leveraging technology solutions from China and Saudi Arabia.

The research house said Dnex is actively looking for avenues to expand its information technology business by tapping its experience and expertise in serving the public sector in Malaysia.

Should the venture come to fruition, Dnex will predominantly be responsible for providing the technical know-how and providing information and communication technology (ICT) infrastructures and subsequent maintenance works.

“We revamped our model and reintroduced our 18-month financial year 2023 (FY23), FY24 and FY25 forecasts at RM160.6mil, RM145.2mil and RM179mil, respectively.

“We have also not imputed this development into our forecasts until some contract wins are announced,” HLIB Research said in a report yesterday.

Dnex recently announced that it had entered into a joint-venture (JV) agreement with Zhongheguoji Construction Group Co Ltd (CSI) to set up a JV enterprise (China JVE) to provide licenses and/or services to Chinese and international customers.

The JVE also allows Dnex to access technology and solutions from China in areas of smart city and artificial intelligence, among others.

The registered capital of the JVE amounts to 20 million yuan (RM13mil) and will be funded by internally generated funds. Dnex would hold a 60% stake in China JVE, while CSI would own the balance of 40%.

Recall that Dnex and Ajlan and Bros Holding Group previously signed a JV agreement in March this year to form an equally-owned JV (KSA JV) to carry out systems integration in smart cities and large enterprise projects in the Mena region.

The newly formed JV agreement with CSI and the collaboration agreement between both JVs to be incorporated mark a continuation of Dnex’s venture into the Mena region by leveraging technology solutions from China and Ajlan and Bros’ access to the region.

HLIB Research noted that this venture is in conjunction with the objectives of Saudi Vision 2030.

This is the kingdom’s aim to implement smart-city projects across cities such as Makkah, Riyadh, Jeddah, Al-Madinah and Al-Ahsa, allowing Dnex to ride on the growing ICT spending in years to come from the kingdom.