AutoCount Dotcom Berhad (ADB) is a Malaysian company that specializes in developing and selling financial management software. Founded in 1996, ADB launched its own accounting software under the AutoCount brand in 1998 and started selling it in Singapore the following year. Over the years, the company has expanded its product offerings, including point-of-sale (POS) and payroll management software, to enhance its competitiveness and strengthen its product ecosystem.
With the rapid development of technology, ADB launched cloud-based services in 2021 to sell subscriptions to its software. As of now, ADB has 269 distributors across Malaysia, Singapore, Brunei, and Myanmar. According to a report by Smith Zander, ADB has a market share of 13.79% in Malaysia and 5.86% in Singapore.
It is worth noting that ADB does not rely on any single customer. In the fiscal year 2022, its largest customer, Ingenious Business Software Pte Ltd, accounted for only about 5.30% of total sales. According to the company’s prospectus, ADB has net cash of RM 17.6 million as of the end of the fiscal year 2022.
Its revenue breakdown includes approximately 69.05% from accounting software sales, 11.37% from POS software sales, 7.60% from payroll management software, 9.29% from technical and management services, and 2.69% from other businesses. Sales in Malaysia accounted for 80.65% of the company’s revenue, while sales in Singapore and other countries accounted for 18.72% and 0.63%, respectively.
Looking at ADB’s growth in recent years, the company has maintained double-digit growth and its subscription model sales continue to show strong growth. As a reference, the new business accounted for less than 2% of total sales in 2019 and has now grown to 11.73%. From a personal perspective, the subscription model enables small and medium-sized enterprises to purchase and use the company’s financial management software at a relatively low cost, which increases the company’s market share.
ADB also launched cloud-based services to enable customers to store their data in the AutoCount Cloud, which increases their reliance on the company’s products. In recent years, the company has maintained a customer stickiness of over 70%. It is expected that the company’s subscription model and cloud-based services will bring more fixed income in the future.
Compared with other local competitors, ADB’s business scale is much larger. In terms of net profit margin, the company ranks second with a high net profit margin of 35.75%. In comparison with other locally listed software companies such as CUSCAPI, YGL, IFCAMSC, CENSOF, and RAMSSOL, ADB’s financial performance is outstanding. CUSCAPI, YGL, and IFCAMSC are all in the red, with CENSOF’s net profit margin lower than 5% and RAMSSOL’s net profit margin lower than 20%.
As ADB prepares to list on the ACE Market on May 9, 2023, at a price of RM 0.330 per share, it is an exciting investment opportunity for Malaysian investors. With its strong track record of growth, diversified customer base, and high net profit margin, ADB is well-positioned to continue its success in the coming years.
Investors looking to invest in ADB should consider its potential for growth and market share expansion, given its strong track record and high net profit margin. The company’s subscription model and cloud-based services also offer opportunities for recurring revenue, making it an attractive investment for long-term investors.
However, as with any investment, there are risks to consider. ADB’s reliance on the Malaysian and Singaporean markets could limit its growth potential, and increased competition could affect its market share. Additionally, changes in technology and regulations could impact the company’s business model and revenue streams.
In my personal opinion, ADB would remain an interesting IPO for Malaysian Investors to look at.
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