ICTZONE: Technology Solutions Provider Initiates Coverage with ‘Buy’ Rating Amid Strong Growth Prospects
| Key Information | Details |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
TA SECURITIES has initiated coverage on a prominent technology solutions provider with a “Buy” recommendation, setting a target price of RM0.25. This price represents a potential upside of 25.0% from its last traded price of RM0.20. The positive outlook is primarily driven by the company’s robust financial performance, strategic business model, and significant opportunities arising from ongoing national digitalisation initiatives.
Performance Review and Future Outlook
The company has demonstrated remarkable financial growth, with revenue surging from RM75.1 million in FY23 to RM127.8 million in FY25. This robust expansion was largely fueled by higher sales secured through strategic partnerships and technology financing for new ICT hardware and software contracts. Core net profit also saw a healthy increase, rising from RM6.4 million in FY23 to RM9.5 million in FY25. While net margins remained stable around 8.0% during this period, reflecting higher financing costs associated with the scaling up of its TechFin and rental asset base, analysts anticipate improvement.
Looking ahead, TA SECURITIES forecasts continued strong revenue growth, with projections reaching RM171.5 million in FY26F, RM239.3 million in FY27F, and RM279.6 million in FY28F. This topline expansion is expected to drive substantial core earnings growth of 45.7%, 45.4%, and 17.9% for FY26F, FY27F, and FY28F, respectively, with an anticipated average net margin of 10.0% for these forecast years.
Key Growth Drivers
A core driver of this positive trajectory is the company’s unique Multi-Lifecycle TechFin Model, which generates recurring, high-visibility earnings through long-term contracts, some extending up to five years. This model allows the company to extract multiple layers of value from each ICT asset, significantly enhancing margins, capital efficiency, and return on investment. By shifting away from one-off ICT sales to a more recurring income profile, the business aims for a more stable and predictable financial performance.
The company’s strong order book further reinforces its growth potential, estimated at RM312.3 million as of January 2026, complemented by an ongoing tender book valued at RM539.3 million. Analysts anticipate annual orderbook replenishment of RM200 million, RM250 million, and RM300 million for FY26F, FY27F, and FY28F respectively, supported by both new customer acquisitions and repeat demand from existing clients.
Furthermore, the company is strategically positioned to benefit from major national digitalisation programmes such as MyDIGITAL, NIMP 2030, and the MADANI Economy. These initiatives, coupled with market trends like the end-of-support for Windows 10, the rise of AI-driven computing, and the increasing adoption of rental and lease-based ICT solutions, are creating significant demand for the company’s flexible and integrated technology solutions.
Valuation and Risks
The “Buy” recommendation is based on a target Price-to-Earnings Ratio (PER) multiple of 11x. This represents a 20% discount to peers, which analysts believe is justified given the company’s smaller market capitalisation, higher gearing arising from its asset-backed TechFin model, and a shorter public track record post-IPO. Despite these factors, the assigned PER is considered to offer compelling upside, supported by its comparable clientele, operations with a forecasted 10.0% net margin, a solid orderbook replenishment pipeline, and relatively higher Return on Equity (ROE).
The company also maintains a clear dividend policy, intending to distribute up to 20% of its annual audited net profit attributable to shareholders, providing an additional income component for investors. Key risks highlighted in the report include its dependence on strategic partners and the inherent need to secure sufficient financial capital to deliver on new orders and contracts, especially as the business scales.
Conclusion
In summary, the research report from TA SECURITIES underscores the technology solutions provider’s strong market position and growth trajectory. Its innovative TechFin model, robust order book, and alignment with national digitalisation trends are expected to drive sustained earnings progression and potential valuation re-rating, making it a compelling “Buy” at the current juncture.
