Hong Kong-listed IT service provider Automated Systems Holdings Ltd (ASL) aims to expand the scale of its mainland business.

The company's managing director, Lai Yam Ting, told China Daily that the opening of the Guangzhou office last year was the cornerstone in the company's entry into the mainland market.

To further scale up the mainland business, ASL plans to set up footprints in northern regions. Lai hopes the mainland market will constitute 20 percent in terms of revenue contribution.

At the end of last year, ASL established its first branch in Guangzhou. "Given more and more Hong Kong enterprises moving their back-offices to the mainland, the establishment of the office could cater to the increasing demand in IT solution," said Lai.

The services the office provided include content management solution, backup, restore and archive solution (BURA), remote connectivity solution and application performance management solution.

Despite that the ASL had already opened a mainland joint venture (JV) with its parent group CSA, Lai stressed that the propositions of the the JV and the newly opened Guangzhou office are different. "The Guangzhou office mainly engages in system integration, while the venture monitors and elaborats our outsourced businesses," he said.

"Pearl River Delta region is the industrial hub of Hong Kong manufacturers. Against this backdrop, the Guangzhou office is geographically convenient to deliver our services to them," Lai said, adding that the office would be the growth engine for the business in southern part of mainland.

Although only 10 local staffs and several mainland-Hong Kong shifted management staffs are deployed in the office, Lai said that the team would size up along with the progress of the mainland business.

He revealed that the company would not cap the capex (capital expenditure) to finance the mainland expansion. "The financial status of the company is healthy with HK$214 million cash in hand at the third quarter of 2006."

"We don't want to set fixed budget limit for the foray. We are willing to pour the money as the projects are found worthwhile to invest."

Apart from the Guangzhou office, ASL has set its sight on the northern regions, especially the first-tier cities such as Shanghai and Beijing.

Lai explained the current size of the mainland network is insufficient to cater to the rapid growth of its customers. "Many of them have set up offices or branches in Shanghai and Beijing. If they need our IT supports, we could only outsource to local IT firms," he added.

Lai said ASL would take acquisition for the expansion, because "it is effective and time-saving."

"Currently we are in talks with seven to eight local players. They are all 70 to 100-staff companies," he said. "We are still assessing their results and performances. Hopefully some deals can be struck in the middle of the year."

With the fragmented and short history of the mainland's IT solution industry, Lai believed that the market still has plenty of room to explore.

"Although the mainland arm currently contributes paltry profit to the group, we are confident the market would be more important and influential in terms of profit contribution," he said, adding the sector would weight about 20 percent of the overall business several years from now.

"The mainland business is expected to reap the benefit next year, of which the estimated annual growth is able to reach 50 to 60 percent," he said.

Speaking to Hong Kong market, Lai conceded the market was almost saturated in terms of uptaking new customers.

"(However) that doesn't mean the market's revenue will undergo setback. In the light of the income from the regular upgrade and maintenance services, the market will actually grow in a steady and moderate rate," he said.

He added that the company would evolve to be more "service-orientated". "We will step up efforts to raise the revenue of the segment from current 30 percent."

Over the previous two years, ASL had been awarded contracts from giant companies such as Cathay Pacific.

The IT services provider recorded HK$887.5 million in turnover for the first nine months of last year, increasing HK$130 million from the previous year, while the company raked up a 53.2 per cent growth in net profit, to HK$29.9 million.

In the same period, product and service revenues increased by 15.7 percent and 20.2 percent respectively, contributing 65.5 percent and 34.5 percent to the group's total turnover.

Lai's biography

Lai Yam Ting is the Managing Director of Automated Systems Holdings Limited (ASL) and is responsible for directing the company's corporate operations and business in Hong Kong, Macao, Thailand and Taiwan. He joined ASL in 1976 as an engineer and held different management positions during his services in the company.

Lai had played a key role in fostering the company's rapid growth, including its public listing on the Stock Exchange of Hong Kong Limited in 1997. Lai's loyalty and commitment to the company had built up a strong team of staff within ASL. He has extensive experiences in the IT industry and is well known within the IT community in Hong Kong. Lai holds a bachelor degree from the Chinese University of Hong Kong.

Career profile

Date Position

19-10-76 Engineering Technician Trainee

08-08-77 Engineering Supervisor

01-07-82 Field Service Engineering Manager

01-01-89 Deputy General Manager

01-01-90 General Manager, Hong Kong

16-10-97 Executive Director

01-04-02 Managing Director