Eduspec prepares for a better year
Lim Cian Yai 
Lim believes STEM programmes will eventually become a part of every school curriculum

DESPITE the tough business challenges it faced last year, integrated education solutions provider Eduspec Holdings Bhd is preparing to return to profitability.

It is undertaking a restructuring exercise, which it hopes will yield better results for its shareholders this year.

Eduspec is also banking on the consolidation of its 85%-owned Philippines subsidiary to help turn the tide for its FY18.

Additionally, the company is revamping its business units in Malaysia, Singapore, Indonesia, Hong Kong and Thailand as well.

Company CEO Lim Een Hong tells FocusM: “Last year presented a great challenge for us due to the sluggish figures posted by our Indonesian subsidiary. Rest assured that FY18 will be better compared with FY17.”

Eduspec has three business pillars under its roof – programme training, Digital School Solutions and Integrated Education Solutions & Services.

With the revamp, more emphasis will be put to expand and strengthen training activities with a focus on Science, Technology, Engineering and Mathematics (STEM) programmes.

The division aims to hone student’s knowledge in information technology and STEM applications in computer science and robotics.

The Ministry of Education has long advocated the importance of STEM education among students.

But since it has yet to be made a mandatory as part of the curriculum, adoption has been slower than expected.

“Over the years, we have invested substantially in localising the curriculum and teacher training. Our hard work and investment will bear fruit,” Lim says.

He believes STEM programmes will eventually become a part of every school curriculum. When this happens, and with wider public awareness, he says Eduspec will reap the harvest.


Bumpy ride

Eduspec bled during its FY17 ended Sept 30. If the trend is not reversed, it will remain in the red in FY18 as well.

Hence, this year will be crucial as last year’s bumpy ride brought with it several disappointing developments.

In December, it terminated a five-year contract with China-based Beijing ZhongChuang HuaYing Technology Co. Ltd (BZC), which was supposed to generate US$15 mil (RM60.11 mil) in revenue for the next five years.

Then, its Indonesian unit made significant losses due to a lack of government contracts.

Further losses from its subsidiaries in Singapore and Hong Kong caused the company a net loss of RM11.88 mil compared to a profit of RM4.25 mil in the previous corresponding period.

Its turnover was also down 39.17% to RM49.55 mil from RM81.45 mil.

Lim is aware that its business mainly operates on a project-centric model in Indonesia, which is at the mercy of budget allocations. As a result, the income stream usually tends to be a “one-off” matter. 

In contrast, program–me-based projects such as STEM activities generate a recurring and stable income. But the margins are lower compared to the project-based income model.


Switch in focus

Due to pressures it faces to raise profits and return to the black, Eduspec is switching its focus to programme-based business activities.

It recently embarked on another partnership with PKU-HKUST Shenzhen-Hong Kong Institution (PKU) and is working to solve issues like programme localisation that arose with the previous partner, BZC.

Eduspec wants to leverage PKU’s strengths and expertise in market development, programme localisation, printing and publishing, teachers training and certification of STEM education in China’s schools.

If all goes well, PKU will be the standard bearer, setting a new benchmark for future collaboration with companies from there.

“The localisation process is not just about language and assimilating STEM programmes into the education system. It involves the entire curriculum as well.

“Once we manage to sort out these issues, it will be easier for our partner to deliver the programme,” says Lim.

The STEM programme’s localisation process may take up to a year to complete. Meanwhile, Eduspec is already approaching resellers and distributors for new business opportunities once the programme is ready for implementation.


2018 outlook

Despite wanting to focus on programme-based activities, Eduspec is not giving up on contracts and project activities.

Lim says the company is reviewing past ones to study loss-making projects in greater detail.

“We will renegotiate all contracts. There is a need to bring more dynamic and higher value services to students and schools.

“Right now we have about 200 ICT contracts in Malaysia, gradually we intend to migrate these jobs into STEM-related ones. With that, hopefully it will trickle down to better profit margins for us,” he says.

Additionally, Eduspec is preparing the groundwork for the launch of Eduspec Services for Parents (ESP) this year.

The new technology service aims to furnish parents with customised and timely information on their children’s education via the mobile app.

The app will include an announcement system, E-wallet, analytics, attendance, assessment results and other valuable features.

Lim says the app will be launched once the company is allowed to embed the e-payment feature into it and integrate ESP into the school’s management system.

With such multi-pronged revamp plans for the year, Eduspec is confident it will eventually return to the black. 


Lessons learned

The termination of its partnership with BZC taught the company some important lessons.

In June last year, Eduspec signed a framework agreement with the company to promote and distribute the Carnegie Mellon University Robotics Academy certified STEM Robotics Curriculum in mainland China.

BZC was appointed the exclusive distributor in the country for five years. But problems began when its partner conducted trial runs in China.

“Our initial strategy was to reduce operating risk to as low as possible. Hence we maintained little involvement in the China operations.

“However when our partner conducted a trial run, they encountered difficulties in getting schools to adopt the STEM education.

“They realised they needed more support from us as we best understood the curriculum,” Lim says.

As a result, the parties decided to mutually end their agreement. Lim says the termination did not have any financial impact on Eduspec.

This article first appeared in Focus Malaysia Issue 267.