ICTZONE: Strong Revenue Growth Drives Earnings Beat, Analyst Raises Target Price

Performance Review

A technology services provider has significantly surpassed expectations for its financial year 2026 (FY26), with core net profit reaching RM15.2 million, accounting for 114.6% of full-year forecasts. The outperformance was primarily attributed to higher-than-expected revenue generated from the trading segment. The group also declared a first interim dividend of 0.2 sen per share for FY26, consistent with the previous year.

Revenue growth was robust across all segments year-on-year. The trading segment, encompassing ICT Hardware and Software, more than doubled its revenue to RM85.3 million. Concurrently, the Technology Financing segment expanded by 24.3% year-on-year to RM94.8 million, highlighting the resilience and scalability of its recurring TechFin business model. Quarter-on-quarter, 4QFY26 revenue surged by 28.2%, driven by strong performances in both Technology Financing (+10.2%) and Trading (+54.9%). This robust growth led to a sequential increase in core net profit from RM3.7 million to RM3.8 million.

Future Outlook and Market Dynamics

The outlook remains positive, underpinned by a strong rebound in global PC demand. Industry research by Gartner indicates that global PC shipments exceeded 270 million units in 2025, marking a 9.1% year-on-year growth. This surge is propelled by enterprise refresh cycles and the impending end-of-support deadline for Windows 10 in October 2025, which prompts organizations to upgrade hardware.

Furthermore, hardware costs are projected to rise sharply. Memory chip prices have already surged, with Samsung raising DRAM prices by up to 60% in late 2025. Gartner forecasts that combined DRAM and SSD costs could escalate by 130% by the end of 2026, subsequently pushing PC prices up by 17% in the same year. This environment is accelerating the adoption of Device-as-a-Service (DaaS) models, as businesses seek to spread costs over time and benefit from managed lifecycle support, rather than absorbing large upfront capital expenditures. This strategy helps organizations stay current with hardware while mitigating exposure to volatile component pricing.

Looking ahead, the company aims to secure RM250.0 million in new orderbook replenishment for FY27F, intending to sustain its earnings growth momentum into the new financial year.

Analyst View

TA Securities has revised its earnings forecasts for FY27 and FY28 upwards by 14.6% and 13.6% respectively, reflecting stronger trading revenue assumptions. Consequently, the investment bank has raised its target price to RM0.31 (from RM0.27 previously), based on an unchanged target Price-to-Earnings Ratio (PER) of 11 times for FY26 Core EPS. The analyst reiterates a “Buy” recommendation, noting that the recent share price pullback presents an attractive entry opportunity with an implied upside of 82.4% from current levels. The firm favors the company for its recurring, contract-backed earnings, unique multi-lifecycle model that enhances margins and capital efficiency, and structural tailwinds from the government’s ongoing digitalization agenda.