IT: An Expensive Lesson 

Perhaps the most shocking news recently in the IT industry was a fraudulent transaction committed by an ex-employee of IT City Public Company Limited (IT) via the online payment platform with the amount of damages of approx. 90 million baht.

 

Oh my goodness!…What happened to IT’s online payments.!? Why does it fall to provide security..?   

 

As a consequence, the share price of IT yesterday edged lower nearly 9% to close at ฿2.10/share due to a spike in selling pressure.

 

In fact, IT is looking very attractive and it is one of Thailand’s first pioneering IT companies to be an IT equipment integrated distributor, offering multiple types of products such as PC, laptop, smartphone and gadget, under the trade name “IT CITY”. Key revenue streams of IT are 1) point of sales, 2) online store and 3) property rent.

 

Regarding the company’s operating results, IT has been recording earnings continuously. In 2017, a net profit was 63 million baht and a total revenue was 5,008 million baht. In 2018, a net profit was 42 million baht and a total revenue was 5,118 million baht and in 2019, a net profit was 24 million baht and a total revenue was 5,378 million baht.  

 

But it was a pity that IT has a low margin which resulted in a very low net profit margin. The NPM was 1.27%, 0.82% and 0.45% for the year 2017, 2018 and 2019, respectively. 

 

Despite having low NPM, IT still offers a dividend payment regularly.

 

In matters of a recent company issue, it is expected that the damage of 90 million baht would lead IT to a turnaround to book loss because IT will set such amount in full as a provision in its 2020 financial statements. 

 

IT’s 2020FY is projected to report a net loss of more than 70 million baht, shrinking from a 9M net profit of 14 million baht. 

 

However, if IT enables to recoup the misappropriated funds, the company might rebound to book a profit after that…but let the future take its course!

 

What we can expect from IT now is how will it prevent the re-occurrence of any fraud, and will IT reshuffle its Board or restructure its financing structure..?