Totm Technologies, the new name of Yinda Infocomm, aims to turn around with new shareholders, new management, a new name and a new business.
The man leading the move to diversify from telecommunication engineering to biometric-based identity management systems is Pierre Prunier, who took on the CEO role six months ago. The new name of the company took effect on Oct 6.
This marks the second name change for the company, which, prior to Yinda Infocomm, was known as CMC Infocomm, an equal joint venture between Malaysian company CMC Engineering and TEE International, an engineering and infrastructure player listed on the SGX. The original business serving the telcos faced tough competition which hurt margins. For the past 10 years except for FY2019 ended May 2019, it was in the red.
When Shanghai Yinda Science and Technology Industrial Co, a China-based entity, assumed control of CMC Infocomm back in FY2017, there were some tepid signs of improvement, but the positive impact, if any, took time. “It took some time to realign our work processes and procedures under the new management team, adapting to local work cultures, as well as work towards the new strategic direction imposed by the new board,” says Frederick Lau, deputy CFO of Totm.
The slowdown was already somewhat evident before the pandemic, as the telecom operators, facing tougher competition of their own as the market saturates, held steady, or even cut back capital expenditure. For contractors like Yinda Infocomm, there were fewer projects to bid for.
When the pandemic hit, the company’s business was again hurt, as projects in the various markets ranging from Singapore, Thailand and the Philippines were further delayed. For the latest FY2021 ended May 31, the company reported that its losses widened to $7.8 million from $3.2 million incurred in the preceding year, while revenue dipped 31.3% y-o-y to $6.8 million.
Identify and authenticate
Now, if Prunier can have his way, the newly-renamed Totm Technologies will be capturing more business in the fast-growing market for digital identity management, tapping on biometrics technology, which makes use of facial recognition, fingerprint recognition, iris recognition to help identify or authenticate individuals.
On April 6, the company completed the acquisition of International Biometrics (InterBio), of which Prunier is a director and chief strategy officer. Totm paid a total of $35 million, met with $13.5 million in cash and also shares worth $21.5 million.
“There was a global trend towards digitalisation and this was happening even pre-Covid-19. There are now several new ways of transacting in an economy that do not rely on physical needs. It all has become digital. Covid-19 definitely accelerated the need for that,” explains Prunier in an interview with The Edge Singapore.
InterBio focuses on so-called identity management, which helps in the authentication of identity when transactions are to be done. Presumably, this is a form of technology that large organisations such as banks and even governments can tap on, given the large numbers of clients or people they have to deal with. It is already gaining some traction.
For example, one of the existing InterBio projects is to help digitalise the national ID for Indonesia’s government — an endeavour by any measure, given the more than 200 million people in the country.
Trade with caution
Totm’s move into a new industry has probably inspired a positive reaction to its share price. Year to date, it has surged some 65.5% to 18 cents on Nov 10, giving it a market capitalisation of $154.6 million.
There was a particularly active period from late last year till the earlier part of this year, around the time the company launched several rounds of placement exercise where new investors were brought in. The company said that one Tan Chin Tuan helped to introduce investors to the placements. Between Sept 24, 2020, and March 30 this year, the company’s share price jumped by 181% to 14.9 cents.
On March 31, SGX RegCo issued a “trade with caution” alert on Yinda, citing a review of the trades done which showed that “a group of accounts appeared to be influencing the share prices of the company”. The initial findings by SGX Regco suggested that the individuals behind these accounts are likely connected to the introducer Tan. The share continued rising to as high as 39.5 cents as at end-May.
“The board notes the trade with caution announcement by SGX Regco,” states the company in a Sept 29 written response to questions posed by the Securities Investors Association (Singapore) or SIAS. “The company did clarify with the introducer. The introducer has informed the company that he did not trade in the company’s shares at any time,” adds the company in the response, which was issued in the name of Prunier.
Meanwhile, the company found more backing. In June, the most recent round of placement was completed. The company issued a total 195 million new shares at 13.5 cents each to two of its existing substantial shareholders Hing Chow Yuen and Chee Tuck Hong, who now hold 9.51% and 4.36% respectively.
The movements of its share price aside, the company is moving ahead into its new business areas. If market projections are to be believed, there is an expanding pie for Totm to try and capture.
According to Meticulous Market Research, biometrics made up the largest share of the global market for automatic identification and data capture (AIDC) technologies in 2020, a rapidly growing market that will surpass $100 billion by 2025.
Meanwhile, according to a report from Markets and Markets, the identity verification market is projected to grow by 15.6% CAGR from US$7.6 billion ($10.2 billion) in 2020 to US$15.8 billion in 2025, with biometric technology solutions growing at a higher rate than non-biometric platforms. In addition, the wider biometric system market is expected to grow from US$36.6 billion in 2020 to US$68.6 billion by 2025, a CAGR of 13.4%.
With projections like these, Prunier believes that Totm can capture a slice of the growing market and that he is confident that the company will see a larger contribution from the new digital identity segment, as FY2021 only saw a two-month contribution from this segment. That alone was $1 million, and made up 16.4% of Totm’s total revenue for the year.
“We want to be recognised as a digital identity solutions provider. We want customers to hear the name Totm Technologies and feel confident that we can provide them with an end-to-end solution with all the components required, be it a government body, a MNC or SME,” says Prunier.
“We have spent the last six months building [our footprint] across the value chain and we will continue to do that by looking for prospects and opportunities to target more companies in the industry and find ways to work with them, be it through investment, JV partnership, licensing agreements, and more. There are many ways we can explore this,” he adds.
Meanwhile, for the current FY2022 period, Totm has already expanded its presence in its new segment with several new partnerships, acquisitions and investments. Some of which include its memorandum of understanding with TriVentures Capital to form a strategic partnership to have a trade partnership and jointly develop products and/or patented approaches.
Totm has also invested in TECH5, an international technology company which focuses on developing disruptive biometric and digital ID solutions through the application of artificial intelligence and machine learning technologies; an investment into Pattra Aksa Jaya, an e-wallet provider; and many more.
With all these investments, what is Totm’s goal?
“We wanted to create a stack of technology providers in one chain. We want to be vertically integrated across the supply chain. When you look at each company that we have invested in, they all provide a singular component in that chain. There is some overlap, I’ll admit, but there are very important components being provided,” says Prunier.
Currently, the company’s presence in Indonesia for this segment is rather large, but Prunier explains that the company is being opportunistic, because of the country’s large population and evolving market. Having previously worked in Indonesia, Prunier too is familiar with the market and has an optimistic outlook on it.
Besides the national ID project, Totm is in talks with financial institutions such as banks and FinTech companies in Indonesia to provide them with its strong end-to-end digital know-your-customer (KYC) solution.
Along with the change in the technology focus, the Totm is changing its business model as well. When its mainstay was telecoms networking, the company’s revenue was largely project-driven, and therefore by nature lumpy, as it depended on the number and value of contracts it could win. Now, it will gear towards “higher quality” recurring revenue stream by offering “Identity-as-a-Service (IDaaS)”, which includes a significant component of technical support and maintenance services, says Prunier.
Legacy business to remain
It is clear that Totm is taking a big leap forward with this diversification and making several headways into the industry. But what about its legacy telecommunications business?
As of now, Prunier does not see a need to divest that business. The telecommunications segment still has its ongoing projects and he intends to see them through.
Although he acknowledges that the board has brought him in to spearhead the digital identity segment, he says that the staff from the telecommunications segment still remain and will continue to run the show.
Photo: The Edge Singapore/ Albert Chua