LGMS: Market Transfer Poised to Boost Cybersecurity Firm’s Profile, Investability

A prominent cybersecurity firm is set to enhance its market standing and appeal to a broader investor base following the approval for its transfer from the ACE Market to the Main Market of Bursa Malaysia. The move, which has been a long-term strategic objective, is expected to be completed by February 2026, subject to regulatory approvals.

Rationale for Transfer

The decision to upgrade the listing status is primarily driven by ongoing discussions with potential institutional investors and strategic partners, many of whom are restricted from investing in companies listed on the ACE Market. Management believes the transfer will significantly enhance the company’s corporate profile, credibility, and overall investability, particularly among institutional investors. Crucially, the company has reiterated that there are no plans to issue new shares in conjunction with the transfer. Any potential acquisitions of shares would occur via secondary market transactions, thereby avoiding dilution for existing shareholders. This deliberate progression aligns with the company’s growing scale, operational track record, and strategic direction.

Performance and Outlook

Despite the listing transfer, the investment bank (Mercury Securities) anticipates no foreseeable earnings impact, maintaining its FY25E/FY26E earnings forecasts. While near-term earnings might experience some pressure from headcount expansion and one-off costs, long-term revenue growth is expected to be robust, underpinned by persistent structural demand for cybersecurity services and improved capacity utilisation over time. The firm enjoys a strong industry position as a recognised cybersecurity specialist in the Asia-Pacific region, further bolstered by its inclusion in Gartner’s Market Guide for DFIR Retainer Services and a track record of high-margin delivery. Strategic partnerships with global and regional players, including a 25% stake from Mitsui, are expected to facilitate market access and overseas expansion, supporting potential M&A opportunities. However, management cautions that M&A discussions are still nascent and non-binding.

Investment Bank’s View

The research firm maintains a HOLD recommendation on the company, with a target price of RM0.61. This valuation is based on an unchanged target P/E multiple of 23x applied to its FY2026E EPS of 2.7 sen, benchmarked against the 3-year average historical P/E of domestic peers. Key risks identified include competitive pressure, the skilled labour-intensive business model, and exposure to local clients.