Quick Read on $OPENSYS / 0040 (OPENSYS (M) BERHAD) 2Q2024 report, key takeaways from management discussion & notes:

Comparing YoY
- Revenue 2Q2024 increased to RM21.4mil, 2.3% yoy increase from RM20.9mil vs 2Q2023.
- PBT of RM4.35mil in 2Q2024, 2.4% yoy increase vs RM4.25 mil in 2Q2023.
- Hardware revenue declined from RM3.686 mil to RM1.10 mil in 2Q2024, mainly due to delays in customer site readiness for machine installations during the quarter. [Probably this is why their inventories went from 13.7mil in Q1 to 21mil Q2 in their balance sheet?]
- This decline was mitigated by the strong performance of the Solutions and Services segment, which registered robust growth of 17.8% in 2Q2024, reaching RM20.30 mil from RM17.232 mil in 2Q2023.

YTD performance (6M2024)
- Revenue of RM42.046 million, 9.7% increase vs RM38.335 million in 6M2023
- Hardware revenue decreased from RM4.5 million to RM1.48 million in 6M2024, primarily due to delays in hardware installations during the first half of the year
- Solutions and Services segment continued to be the main revenue contributor, having a 20.0% increase from RM33.8 million in 6M2023 to RM40.57 million in 6M2024.
- Revenue is in line with the higher PBT of RM8.574 million in 6M2024, a 7.5% improvement over RM7.976 million vs 6M2023.
- They anticipate a recovery in hardware revenue in the upcoming quarters as demand for hardware gradually increases during the 2H of the year.

Future growth & Prospects:
- CRM business segment: a marked improvement in market sentiment has been observed, as banks resume procurement efforts, signalling sectoral recovery.
- Cheque processing services are poised to contribute to better performance as they acquired a 7-year contract from a major local bank.
- The replacement of aging CRMs supplied to the banking clients will begin in the 3Q 2024 and beyond in the next 2 to 3 years.
- Additionally, there is growing interests from the same customers in advancing the CRM capabilities, such as integrating features like cheque deposit and debit card dispensing, which is expected to positively contribute to their Hardware business segment.
- While expanding core operations, they are developing new revenue streams to drive both revenue and profit growth: Strategic initiatives including SmartCIT, Branch of the Future solutions, the buySolar online marketplace, and merchant acquiring services.

Personal thoughts:
- Their recurring revenue part (services) seems to be growing well, the fact that it could cover the hardware segment shortfall.
- Based on the management’s notes, next 2 quarters would be interesting to monitor.
- The start of the CRM replacement cycle can be another boost for them.



Tagging some people I know who are interested in them:
@rhresearch @terence775