I Synergy Group Limited (ASX:IS3) listed on the ASX in March 2017 with an IPO price of 20 cents.
The company is one of Malaysia’s leading affiliate marketing network and solutions providers, connecting advertisers through its marketing platform.
However, it also branched out into other areas in the latter half of 2017 and these initiatives should begin to gain traction in 2018.
Possible entry into Australia
In particular, the company’s focus on the retail sector should begin to pay dividends and non-executive chairman Bruce Symon recently pointed to this strategy.
He said: “The group’s future will see a continuing focus to invest in more retail opportunities, further expanding its geographical presence and brand awareness.
"Additionally, we are assessing opportunities to accelerate growth with a number of additional growth and acquisition-focused initiatives in Australia.
"This will further diversify revenue and have the potential to increase shareholder value, whilst adding a strategic platform and geographic penetration to Affiliate Junction.”
Affiliate Junction addresses diversified market
The affiliate marketing platform is called Affiliate Junction.
Under the platform, there are a variety of affiliate programs available which cater to various industries and markets.
This assists in providing marketing solutions that enhance product and brand awareness as well as in driving business leads.
The Affiliate Junction platform is home to more than 25,000 affiliates and 1,000 advertisers.
Under the platform, there are a variety of affiliate programs available which cater to various industries and end markets.
Recovering from challenges in 2017
The last 12 months has presented its challenges but for the most part, the company’s share price has remained resilient.
This underlines the importance of the operational initiatives taken in 2017 and these arguably need to be the focus in examining the business.
These included product launches and the establishment of commercial relationships.
Foreign exchange impact
It is worth noting that there was a non-operational factor at play for the majority of the trading period between when the company listed and December 31, 2017, the end of its financial year.
In 2017, the group’s functional currency, Malaysian Ringgit (MYR), depreciated substantially against the reporting currency, Australian Dollars (AUD).
This placed downward pressure on revenues and given the extent of the decline as shown in the chart below, the currency impact was material.
While it can be seen that the downward momentum has been maintained in 2018 the relative MYR:AUD decline is significantly less than experienced in 2017.
It can also be seen that the rate is currently broadly in line with where levels of support were encountered when there was a sharp retracement in 2016.
Key operational developments
I Synergy’s financial performance should be viewed in the context of the extensive investment made in its operations in the Indonesian market.
In 2017, the company launched its first retail loyalty affiliate program in Indonesia, called Smart$aver.id.
This facilitated the group’s unique brand of retail affiliate marketing solution offerings to benefit the nation’s retail community and Indonesian affiliates.
There was significant investment in the development of the program’s website and portal as well as in its marketing initiatives.
Benefits from this investment will have a material impact on the group’s fiscal 2018 performance.
I Synergy intends to invest in more competitive projects, expanding into new categories and markets.
The group’s ability to provide benefits to the retail sector was demonstrated in 2017.
The retail affiliate program MyKad Smart Shopper (MSS) generated a total of RM 6.5 million (A$1.95 million) in sales for Mydin Mohamed Holdings Berhad (MYDIN) as of September 30, 2017.
MYDIN is one of Malaysia’s leading chains of hypermarket, supermarket and emporiums with more than 300 outlets operating nationwide.
MYDIN became an MSS advertiser in June 2017, enabling its members to enjoy the affiliate program’s retail benefits when shopping at any of MYDIN’s 12 participating outlets.
MSS is a retail affiliate program powered by Affiliate Junction.
The collaboration has been a success with the sales generated by MSS steadily increasing at an average rate of 120% monthly over the past four months for MYDIN.