Kronologi Asia leverages on exclusive distributorship for growth

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KUCHING: ACE Market bound Kronologi Asia Bhd (Kronologi Asia) is leveraging on its exclusive distributorship of Quantum Corporation’s products to fuel its earnings growth.

The research division of TA Securities Holdings Bhd (TA Research) in a recent note said Kronologi Asia, through its subsidiary has an existing strategic marketing agreement with Quantum Corporation, which is one of the largest specialised enterprise data management (EDM) providers in the world.

The research firm noted the partnership enable Kronologi Asia to be the sole reseller and marketer of Quantum Corporation’s products in the Southeast Asia region.

TA Research added the partnership also allow Kronologi Asia to tap onto Quantum Corporation’s reputation by offering “Quantum” branded support services, storage and recovery solutions to end customers.

By doing that, the research firm said Kronologi Asia has become a proxy and could experience growth in the EDM industry as well as success from the distribution of products from Quantum Corporation.

Citing market research, TA Research observed that the EDM industry in Southeast Asia recorded higher growth with a compound annual growth rate (CAGR) of 7.1 per cent between 2009 and 2013.

It noted some of the growth drivers for the industry include a growing importance of digital data to enterprises and businesses, increasing requirements for storage capacity, expanding number of established enterprises, government initiatives to drive information technology industry and emergence of Internet-enabled applications leading to an increased volume of digital data created.

The research firm opined that as the EDM industry is still at its introduction stage in many countries located in Southeast Asia, there are significant opportunities for growth for companies as they move up in their market lifecycle stages.

It believes future growth is expected to reach a CAGR of 7.3 per cent to US$937.3 million in 2016.

Thus, TA Research observed Kronologi Asia is looking to expand its business for its existing and new markets as well as strengthening its presence in countries such as Vietnam, Sri Lanka and Myanmar.

Meanwhile, TA Research pointed out that Kronologi Asia is able to reach out to more customers through subcontract of product distributorship with reseller and other distributors.

In the meantime, the research firm noted Kronologi Asia is a regional EDM solution provider which offers customers backup, storage and recovery services for digital data.

TA Research explained Kronologi Asia’s services is to ensure digital data is protected and recoverable in the event of virus attacks, data corruption, computer thefts, fire, floods, earthquakes and other natural disasters.

The research firm added Kronologi Asia’s principal activities include the provision of EDM infrastructure technology comprising hardware and software, provision of EDM value-added solutions and professional services, provision of EDM managed services and provision of annual maintenance and technical support in EDM solutions.

As for the company’s listing, TA Research noted Kronologi Asia is offering an aggregate of 59.2 million new shares to raise a gross proceeds of RM17.2 million.

The research firm said part of the funds raised will be utilised for business expansion activities which focuses on both existing and future potential markets.

TA Research observed the other portion of the money raised from the initial public offering (IPO) will be channelled for research and development to enhance future and existing products.

Apart from that, the research firm said money raised from the listing exercise will also be used for working capital and listing expenses.

Given the size and the future potential of the EDM industry, TA Research believes that Kronologi Asia will be able to generate more income to enhance its earnings growth in the future.