Saturday, September 22, 2012

Answer from RCE Capital for RM18 cash purchase of a one-month old IT firm

I remember a reader asked on RCE Capital's purchase of a company for RM18 million cash. Well, here is the answer that the CEO of RCE Capital has provided. If it is something that will provide competitive advantage, I am all for it. The biggest question however is "how come the company, Urusan Ihsan was just incorporated on July 2012." This one is the biggest question mark, don't you think? Usually, software development work will take more than a month or two to build on. The CEO focused his answer on the code mechanism.

My understanding on companies such as Urusan Ihsan is that for it to build on something, there must be an economic reason to do that. When they have built some code mechanisms which to RCE is so valuable for it to pay RM18 million, then Urusan Ihsan must have thought of selling its system to more than one company, usually RCE and its competitors. Is RCE into reducing competition due to the "code mechanism"? As I see it RCE only has 2 competitors - BSN and Bank Rakyat.

Is RM18 million worthwhile? The one thing I know is that the owners of Urusan Ihsan stand to make 10x within 1 month from incorporation. Wow!

5 comments:

Who are we? said...

I've put some bet on this counter... hoping for some good news on the BONUS issue...but looks like it's "colder then water". Another wrong bet, hard luck!!!

felicity said...

I think RCE will need to do more to gain the trust and confidence of investors. Its business needs some change as well. It does not have advantage against its competitors like BSN and Bank Rakyat.
It is doing rights issue besides the bonus. Hence, some people might not want to put in more cash.

Who are we? said...

Agree on your point.

Will see how the price respond to their recent announcement.

I bot at 0.47.

Who are we? said...

Managed to sell all at 0.47...lucky me!!!
But the price seems to be having some kind of support.

felicity said...

great