Broader range of communication services helps AIT

EXECUTIVE Q&A

Advanced Information Technology Plc (AIT) was established in 1992 to operate an information and communications technology business, initially as a distributor of computer hardware and related equipment. It has since grown from a sales agent into a service provider for information and communications network installation, maintenance and application services, and outsourcing as a complete ICT solution provider. The SET-listed company has invested in two subsidiaries: The Mapleplus Co Ltd specialising in Geographic Information Systems business; and BANC Serve (Thailand) Co Ltd, providing ICT services to financial institutions. Siripong Oontornpan, a company director and president, discusses its strategy and outlook.BUSINESS:

Siripong: ‘‘It’s all in the details’’

Please explain AIT's business model.

AIT does business in the ICT sector. Our role is to be a systems integrator for public and private organisations in Thailand. We focus on creating a solution for our customers and combine hardware and software into one system. AIT has several international software partners. Take Cisco for example, we are its "Gold Partner" and have spent a lot of time and effort building this relationship. Being a Gold Partner means that we have certified IT engineers at the highest level; in total we have a team of 70 engineers.

Exactly what type of services does AIT offer?

Our work with Toyota provides a good example. The group has several dealers/branches and needs to communicate with all of them and have each dealer/branch be able to communicate with one another. AIT will design the network, install the network equipment and ensure that the entire system is computerised online. This same example can be applied to commercial banks.

Also just to provide another example, when TOT/CAT have their new promotions to make cheaper phone calls, AIT sets up the main system and an IP telephone network for them.

How much revenue comes from government projects?

The majority of the customers are public sector, about 80-90%. While the government has been spending money to stimulate the economy, the private sector has been delaying and cutting budgets. So we will continue to focus on the government sector for the time being.

What are the typical margins per project? What is the average length per project?

Generally the average length of a project is three to six months. If the project requires extensive software and applications, then the project may last for a year. AIT's target gross margin is approximately 20%.

INDUSTRY:

What differentiates AIT from its competitors?

AIT was incorporated 16 years ago. Our key management has been working very closely with the government for the past 20 years so we understand their systems and processes very well. Because of our long experience working with the government we understand that it's "all in the detail". Simple things, such as documentation for the bidding process, are vital. You cannot miss one piece of paper or a single sentence. And of course the proposal itself has to adhere to the project's specifications, so technical know-how is required. Also our relationship with our partners, such as with Cisco, means we can purchase Cisco products in bulk volume and with a discount on the purchase which helps us in the bidding process. Finally we have a very good team of 70 engineers here at AIT, and we take great pride in training our employees and ensuring that they are well taken care of.

FINANCIAL PERFORMANCE:

How is AIT performing financially?

Our financial performance has been quite stable over the past few years. Our revenue has been consistently growing at a stable pace over the past few years and we have seen a growth in the size and value of projects.MISCELLANEOUS:

What do you feel are the biggest risks facing your business today?

When I woke up on Jan 1 for the past three to five years, I think to myself are we going to be as lucky as we were last year? I do constantly think about how can AIT stabilise its revenue and earnings, because we operate on a project basis so it's either zero or a hundred. So how can we secure the business? Thankfully AIT has grown to the size that if we miss one or two projects it will not substantially affect us anymore and we can be more flexible with the type of projects we take on.

Given that the majority of your projects are coming from government-owned institutions, does politics affect you?

It depends; things can go both ways but as a business we try to stay neutral on politics.

Where do you see AIT in five years from now?

AIT will ensure that the quality of customer service remains high. AIT will continue to be a stable growth company with revenue doubling over the next five years. This growth will be secure as we do not just go out and sell mobile phones and make very thin margins, AIT will continue to focus on systems integration, expand our technology base and expand into the telecommunications industry. As a company we will maintain strong corporate governance and operate the company professionally. AIT will maintain our constant dividend policy and treat shareholders like we treat our employees, as a member of our family.

The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media & technology company, and the largest investor relations network in the region with more than 400 listed clients. The interview is conducted by Pon Van Compernolle, managing partner of GVC Capital, an investment advisory firm focused on small-mid caps in Thailand. For more information, e-mail pon@gvc-capital.com or howard@shareinvestor.com or visit http://www.ThaiListedCompany.com