Numbers in RM million unless stated otherwise.
| Six Months Ending | 31 Dec 2023 | 31 Dec 2022 | % Change |
|---|---|---|---|
| Revenue | 397.37 | 392.28 | 1.3 |
| Gross Profit | 220.15 | 229.39 | (4.0) |
| Net Profit | 89.32 | 99.71 | (10.4) |
| EPS (in sen) | 3.53 | 3.96 | (10.9) |
Gross profit margin slid to 55.4% (1H23: 58.5%), net profit margin dropped to 22.5% (25.4%). Recurring revenue, which makes up 75% of total revenue (from maintenance and enhancement services, insurance ecosystem transactions and services, and retail transactions processing) grew 7% to RM298.8M. Non-recurring revenue, which makes up the rest (from software licensing, software project services (professional services) and sale of system software and hardware products), came in 14% lower at RM114.2M. The proportion of revenue from higher margin business segment such as software licensing, was lower in 1H2024 as compared to the same period last year. Total expenses was 11% higher y/y at RM119.5M. SAL attributed the increase to annual salary increment post COVID-19, new headcounts and retirement gratuity paid to key management personnel. SAL indicated approximately RM240M worth of deals was closed in 1H2024. Pipeline remains robust with total potential deals of about RM1.4B, of which in the immediate term, approximately RM150M are in imminent stages of closure. No dividend was declared for 1H2024.
My Thoughts
In its commentary, SAL said that core replacement and upgrading projects have become less of a priority for their financial institutional customer base. I am glad the margins remain healthy despite the challenging environment. SAL is trading close to its average 5-year P/E, which makes it neither expensive nor cheap. I took a bite earlier this month, and will refrain from adding more at this point. Will monitor the company's progress as it navigates through the second half of the year.
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