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New Straits Times
09-07-2025
- Automotive
- New Straits Times
Public systems, private delivery: Malaysia's push to modernise identity and energy
VISITORS who pass through Kuala Lumpur International Airport (KLIA) next year will notice a change. Instead of queuing at staffed counters, many will glide through automated gates that verify face, iris and fingerprint details in seconds. According to a project schedule from the Immigration Department, these gates form the first "quick-win" under the National Integrated Immigration System, NIISe, whose full rollout spans 264 locations and links forty external agencies from the police to Interpol. The ambition is clear: to replace fragmented, outdated systems with a single, nationwide ID platform that can support real-time security checks and, eventually, seamless online services. For investors the technical spectacle matters less than the cash flows behind it. NIISe carries a contract value of RM892 million and a delivery horizon that stretches to 2029, providing revenue visibility that is rare in Malaysia's information-technology sector. The project's phased structure — mobile app pilot and KLIA gate installation in 2025, bringing the command centre online in 2026, network-wide completion by 2029 — gives auditors milestones against which to measure progress, reducing the risk of unfinished work languishing on the balance sheet. A second national system, this time for road transport, is moving on a similar timetable. Last September the Road Transport Department (JPJ) awarded a RM133.7 million revamp of its digital platform, with hardware, software and full system re-engineering to run over thirty-six months. Driver licences and vehicle registrations may not sound glamorous, yet they represent the domestic counterpart to border data. When both reside on linked systems, fraud detection improves, renewal times shrink, and upgrade costs fall. The Transport Ministry offered a preview of that efficiency in a March parliamentary reply, noting that the most recent system upgrade finished on schedule while maintaining more than ninety-nine per cent uptime. While the country's identity fabric strengthens, the energy sector is witnessing its own upgrade cycle. In February a consortium led by Germany's Voith Hydro, with HeiTech Padu managing local work, secured a RM2.39 billion engineering, procurement and construction (EPC) contract to modernise three hydro stations on the Sungai Perak cascade. New turbines, generators and 132-kilovolt switchyards will extend the plants' life, raise annual output and stabilise the grid as more solar power comes online. Sensor data gathered during operation will feed preventive-maintenance systems, strengthening Malaysia's long-term electricity security. These three projects — immigration, transport and hydropower — straddle two national blueprints endorsed across the political aisle: the Malaysia Digital Economy Blueprint and the National Energy Transition Roadmap. That bipartisan cover lowers policy risk and, more importantly, knits the contracts into a coherent story of state priorities: secure borders, efficient public services, and clean power. Such alignment would matter little, however, if the main contractor behind key modules were still wrestling with the governance lapses that dogged it two years ago. About three months ago, the company refreshed its leadership team with a pragmatic brief: steady day-to-day operations, rebuild confidence among customers and lenders, and turn signed awards into revenue. Early signals are encouraging. HeiTech has inked two memoranda of understanding; one with Huawei Technologies Malaysia and MyEG Services, the other with Hong Kong-listed Maiyue Technology, to develop an AI computing-power cloud centre for industrial and consumer use. Management also reports a mid-teens percentage increase in the order book since April, even though hardware costs remain high. The tighter project controls introduced during the leadership transition should support margins if volumes continue to rise. Even so, it is early days. The next two quarters will give a clearer picture of whether the new controls and partnerships translate into steadier earnings and smoother project delivery. For now, the company seems to have shifted from damage control to quiet momentum, a shift already noticed by many observers. The financial markets have been among the first to respond. HeiTech Padu's share price climbed to RM4.40 in the fortnight after the NIISe award, more than twice its mid-2024 level, before settling near RM3.30. First-quarter earnings printed nine sen a share, the strongest in years. Capital needs for the hydro project will be met through a private placement drawn down in stages, and RHB analysts expect the company's net‑debt‑to‑equity ratio to remain below 1.0 even at the busiest phase of construction. Four domestic asset-management firms and two Syariah funds have entered the top-ten shareholder list since November, a sign that professional money is beginning to credit the governance reforms. Risks persist, of course. Malaysia still faces a shortage of cleared cybersecurity professionals, and hydrology is hostage to weather patterns no spreadsheet can fully predict. Political turnover can reorder procurement priorities, yet NIISe and the hydro revamp are anchored in blueprints that neither side of Parliament is eager to unravel. The company's mitigation measures include spreading hydro works across multiple catchments and using modular software so faults cannot disable an entire platform. These safeguards are sensible but untested at full scale. A broader opportunity also looms. The Digital Government Blueprint anticipates a time when licensed fintech or logistics providers can query government-verified identities under strict consent layers. Recent policy briefs indicate that the cross-agency data-sharing rules required to make this possible are now before Cabinet for final approval. Once endorsed, NIISe and the revamped transport platform could serve as a secure gateway for private developers, turning today's cost centres into fee-earning services for both the state and the operator. Regional precedents hint at the path: Dagang NeXchange parlayed its customs window into profitable data services, while Telkom Indonesia pairs data centre colocation with grid analytics. The Malaysian iteration avoids hydrocarbons altogether and arrives pre aligned with national policy, an edge that global cloud giants cannot replicate without stronger local licences. Investors therefore face a straightforward calculation. On one side is an older systems integrator that appears to have fixed its internal plumbing, tightened governance and secured multi-year contracts tied to state priorities. On the other sit a still modest balance sheet, intense competition for technical talent, and climate uncertainty that could dent hydro yields. The weighting of those variables will differ by portfolio, but the pendulum of credibility has clearly swung. That brings us to the final question. Why act now? The share price is no longer hidden in single ringgit territory, but it still trades at a low teens forward price to earnings multiple versus high teens for regional peers in government tech and grid services. Future revenue is anchored to audited milestones and government paymasters; optional upside lies in data service layers that could switch on once interoperability standards receive final government approval. Short of an unexpected political reversal or a catastrophic project slip, the odds favour continued rerating as milestones fall. Early movers, in other words, have a window measured in months, not years. Once automated gates open at KLIA and the first refurbished turbine spins into the grid, the crowd will spot the progress that a few are already pricing in. The prudent course is to run the numbers, weigh the risks — and decide whether a quiet, well governed turnaround linked to national priorities is worth a place in the portfolio. So perhaps this is how a public–private comeback happens, not with fanfare or sweeping declarations, but with biometric gates that open, turbines that quietly spin back to life, and a balance sheet that remembers to behave. When national blueprints meet execution on the ground, and delivery replaces ambition as the main event, credibility follows. And in this case, so might the capital. * The writer is a strategic-communications advisor, DBA scholar and chairperson of Pertubuhan Sukarelawan Siber Selamat (CyberSAFE). He formerly led corporate communications at the Prime Minister's Department and now writes on public policy, technology and communications
New Straits Times
07-07-2025
- Business
- New Straits Times
NEXG charts strong growth path
KUALA LUMPUR: NEXG Bhd, the principal technology provider for Malaysia's MyKad national ID project since 2012, is gearing up for its next growth phase with a planned private placement and warrants issuance that could raise up to RM428 million in fresh capital. The funds will support its factory acquisition, debt repayment, and ongoing research and development (R&D) initiatives. While these corporate exercises may be dilutive in the short term, they are expected to enhance NEXG's financial flexibility as it undertakes its first major international expansion, according to Rakuten Trade vice president of research Thong Pak Leng. He noted that the private placement of up to 10 per cent of its issued shares could raise up to RM133.7 million, while the 1.39 billion warrants issued at an exercise price of 21.17 sen per unit could bring in up to RM428 million if fully converted. Thong said while the placement and warrants will dilute earnings per share, they will equip NEXG with sufficient capital to deliver on its international expansion plans while continuing to strengthen its domestic business. "We reckon the investment into the global secure ID facility is not only to elevate NEXG's earnings profile but also to diversify its revenue base beyond Malaysia, paving the way for longer-term sustainability and resilience in a globally competitive market," he said in a research note. NEXG produces high-security identity documents and provides end-to-end solutions for chip-enabled passports, national ID cards, polycarbonate biodata pages, and specialised driving licences. Since 2012, the company has been the principal technology provider for Malaysia's MyKad national ID programme and, since 2016, has also supplied e-passport solutions to the Malaysian government. The company's current order book stands at about RM570 million, anchored by its ongoing national ID and passport programmes, providing strong earnings visibility. In line with its expansion strategy, NEXG plans to construct a new RM250 million high-security identity document production facility, its first large-scale venture abroad. The plant will be developed in three phases, with each phase expected to generate between US$100 million and US$200 million (RM421 million to RM842 million) in revenue, depending on project scope, document type, country-specific standards, and security complexity. This expansion will be funded through a mix of borrowings, proceeds from the private placement, and internal funds. To cater to increasing domestic demand, the group is acquiring a 30,000 sq ft factory in the Klang Valley for RM18.4 million, alongside a RM1.6 million investment in machinery upgrades to ease capacity pressure at its fully utilised Petaling Jaya plant. Concurrently, NEXG will invest RM6 million in R&D to advance its biometric authentication, anti-fraud solutions, and mobile platforms, and allocate RM4 million for ERP and IT system upgrades to drive its digital-first operations. Rakuten Trade has maintained its BUY recommendation on the stock with a target price of 61 sen, valuing it at 23 times its fully diluted earnings per share (EPS) for the financial year ending March 2027 (FY3/27). This valuation represents a slight discount to the regional sector average, reflecting NEXG's comparatively smaller scale. Thong said the FD EPS estimate takes into account an enlarged share base, assuming the full exercise of the group's employee stock options, its private placement, and the conversion of 1.39 billion warrants over three years (with one-third converted annually from FY3/26 to FY3/28).
