COMPUGATES HOLDING BERHAD

(Post date : 15 August 2010)

Compugates Holdings Berhad is a Malaysia-based company engaged in investment holding and the provision of management services. The Company, through its subsidiaries, is engaged in trading, marketing and distribution of imaging, information technology and communication based products.

Its subsidiaries are Compugates Sdn. Bhd., Compugates (S) Pte. Ltd., Compugates Marketing Sdn. Bhd., Classic Distribution Sdn. Bhd., Compugates Development and Mining Sdn. Bhd., Compugates International Sdn. Bhd., Compugates Perak Sdn. Bhd., Compugates Sabah Sdn. Bhd., Selama Muda Jaya Sdn. Bhd., Compugates International Limited, Compugates International (BD) Limited, Compugates International (Bangladesh) Limited, Compugates International Limited (Cambodia) and PT Compugates International. Operations are carried out in Malaysia, Singapore, Bangladesh, British Virgin Islands, Cambodia and Indonesia.

Compugates Group commenced its business operation since 1997, the group strategy of focusing on providing efficient and prompts after sales services to its dealers and customers borne fruits. More strong brands were added into its portfolio of products.
With business growth by 500 folds and new products distribution portfolio, Compugates Group expanded its business horizon to both Penang and Singapore in 2003.
Today, with 8 market-leading brands, diverse products with over 4,000 resellers are the testament of Compugates' commitment towards quality distribution.

New business venture..Year 2010

Compugates Marketing Sdn Bhd (“CMSB”), a wholly-owned subsidiary of Compugates Holdings Berhad announced that it would be venturing into the lucrative cultivation of Gaharu, a rare, expensive and highly sought after aromatic resinous heartwood that has high demand in Japan, China, the Middle East and India among others.

The venture will see the Compugates Group which is principally involved in the trading, marketing and distribution of prepaid cards, imaging, information technology, communication products and green solar power systems with a more than 10,000 strong dealer base in Malaysia alone, diversifying into agriculture and plantations.

Gaharu which is also known as agarwood, aloeswood, oud, chen xiang and jinkoh is a resinous heartwood that forms in the Aquilaria tree when it is wounded and infected with a type of mould. The tree produces a dark aromatic resin in response to this attack that is harvested to produce pure fragrant oil, incense, wood chips & chunks and perfume, while the leaves of the tree make a tea that has traditionally been credited with many medicinal qualities.

The company’s 54 acre Gaharu plantation will see 500 seedling planted per acre.  The value per tree upon harvest in five years is conservatively estimated to be in the region of RM3,000 to 6,000 per tree, depending on quality.  However, the plantation will be able to generate income from Year 1 through the harvest of leaves for tea and branches for wood chips.

A kilogram of unprocessed Gaharu heartwood can fetch as much as RM 10,000 per kilogram*.  Distilled Gaharu essential oil can command up to RM 100,000 per kilogram* and the price is expected to rise due to increasing international demand. Currently countries producing Gaharu from the wild and from plantations can only meet 32% of the world’s demand.

The company made the announcement at a signing ceremony with Envirotech Management Sdn Bhd , a company under the Gaharu Technologies Group that has years of experience in the research and development of Gaharu plants which result in higher yield using improved inoculation methods, shorter cultivation period and hardier plants that require minimal maintenance.

Envirotech Management Sdn Bhd will provide Compugates with one-stop service for all Gaharu related business ranging from consultation, cultivation, maintenance, harvesting to the extraction and sale of Gaharu products.

According to Compugates Holdings Bhd Independent Non-Executive Chairman, Tan Sri Datuk Asmat bin Kamaludin, CMSB has various reasons for the decision to venture into Gaharu cultivation including being among the first to seize the opportunity, the prospect of even greater future profitably through the farming of a rare, highly sought, high value commodity as well as its growing commitment to environment friendly and greener practices.

“While Gaharu cultivation is a huge shift from our core business, it is potentially a highly lucrative business because, the product is rare, the price per kilogram is high, the supply cannot meet demand, the cost of production is relatively low and it can be profitable from Year 1 through the harvesting of leaves for tea and branches for wood chips.  Furthermore, the Malaysian government is in support of making Malaysia, Asia’s Gaharu trading centre ” Tan Sri Datuk Asmat said.
He explained that the company’s risks are low as cultivation of Gaharu is to be carried out on a suitable vacant land owned by a wholly owned subsidiary, Selama Muda Jaya Sdn Bhd while the start-up cost is RM35 per tree and a low maintenance cost of RM1 per tree per month.

Compugates Goes Green
“As a responsible corporate citizen we also view this venture as an opportunity to reduce the depletion of wild Gaharu trees, which is both damaging to the diversity and sustainability of fauna. The Green Way, is the direction that the Group has been moving towards through the addition of green products to our line up of products which include solar powered and alternative energy products.  Agriculture is a logical progression,” Tan Sri Datuk Asmat bin Kamaludin explained.

The high demand for Gaharu has resulted in wild trees being depleted and most of the species considered endangered. In 2004 all Aquilaria species were listed in Appendix II (potentially threatened species) by the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

“Compugates Group is embarking on this diversification into agriculture with a dual purpose – for potentially lucrative returns to our stakeholders and as part of our Corporate Responsibility towards a more sustainable future by offering farmed alternatives to wild forest plant species,” Tan Sri Datuk Asmat said in closing.

If you refer to the information below, you may find out that current stock price is very low, and the company claim that they have NO DEBT currently and the cashflow is about 22Million. (by March 2010). From this point, management are confident with their future invesment as they are NOT company which has bad record like PN17 which has the CASHFLOW problem. Management also mentioned that Compugates is currently trading at a very low price compared to last time, and this company has invest in different types of industry and business which has high growth in future. Once the new invested business start to run, they are confident to gain profit at fast speed.

NO DEBT, CASHFLOW STABLE, DIVERSIFY INVESTMENT AND DISCOUNTED SHARE PRICE CURRENTLY, MAYBE IS WORTH FOR INVESTORS TO COLLECT THIS STOCK FOR POTENTIAL FUTURE GROWTH.