This article first appeared in The Edge Financial Daily, on May 16, 2016.

KUALA LUMPUR: Bursa Malaysia’s ACE Market-listed Eduspec Holdings Bhd hopes to earn as much as RM40 million over the next three to five years after securing the rights to distribute educational and competitive robotic products, and consumer robotics toys in several countries.

“As these are hardware sales unlike other solutions and services (where there is a longer gestation time) we provide to schools, [the] income contribution for these products will be immediate, with first-year revenue of at least US$500,000 (RM2.01 million),” said its chief executive officer Lim Een Hong.

Lim said total revenue from the sale of VEX Robotics products for the next three to five years should be in the range of US$5 million to US$10 million.

Eduspec’s wholly-owned unit Centillion Robotics Ltd on April 26 entered into a deal with Luxembourg’s Innovation First Trading Sarl to become the latter’s exclusive distributor in Malaysia, Singapore, Thailand, Vietnam, the Philippines, Indonesia and South Korea, and non-exclusive distributor in Australia and Japan.

In an email reply to The Edge Financial Daily, Lim said there are no distribution fees payable to secure the exclusive contract, and only sales targets and other deliverables are set to maintain the rights.

On its venture into Thailand, Lim expects the joint venture (JV) there to register a small operating profit for the first year of business. He foresees the company’s revenues from overseas ventures to surpass its home operations this year.

Prior to this JV, the group had set up JVs in Indonesia, Vietnam and the Philippines. The group also has a presence in Singapore.

Overseas businesses accounted for about 50% of the group’s RM76 million revenue in the financial year ended Sept 30, 2015 (FY15).

“In the earlier JVs, the first two years are mainly investment and costs to set up the business and doing business development, and in most such cases, there will be losses in the first two years. However, for this Thailand venture, we forecast a small operating profit for the first year of business,” Lim said.

He said the spending powers of schools in Thailand are higher, and there are many more private and public schools with autonomous right of spending.

“It fits well with our school-to-school service model. We expect, in the next five years, the business in Thailand can be equal to the revenue in Malaysia,” he added.

Although revenues from Thailand will be significant eventually, he said, it may not be realised in the first two years.

The group’s wholly-owned subsidiary, Eduspec Pte Ltd, on May 9 entered into a JV agreement with Thailand’s Next2Steps to set up the JV in the country for marketing, distributing and selling a range of Eduspec’s goods and products.

Next2Steps is mainly involved in solution integrations that provide both hardware and software solutions for the education sector in Thailand.

Based on Eduspec’s equity holding of 60% in the JV, its capital commitment will be US$600,000. The group will fund the investment via internal funds.

Last week, Eduspec saw some buying interest in its shares after the announcement of the Thailand expansion plan. The stock closed one sen or 3.57% higher at 29 sen last Friday.

The group registered a net loss of RM4.16 million for the first quarter ended Dec 31, 2015, compared with a loss of RM3.38 million a year ago.

It is normal for the group to report a loss in the first quarter as it does not receive fees from schools due to year-end holidays.

For FY15, it reported a net profit of RM9.79 million, compared with RM6.85 million for the previous year.