We maintain BUY recommendation for Systech Bhd (KLSE: SYSTECH) with a fair value (“FV”) of RM0.610 per share, based on FY25F P/E of 23.7x. This valuation is supported by profit guarantees totaling RM6.2 million from the acquisitions of 100% of Wilstech and 80% of Talentcloud AI.

• Performance within expectation. Systech’s 4QFY24 revenue rose 29% YoY to RM7.2 million from RM5.6 million, driven by robust performance in its corporate solutions segment. The 4QFY24 gross profit increased by 21% YoY to RM3.4 million. However, strategic restructuring costs, including professional fees and goodwill impairment, resulted in a loss before tax of RM3.9 million.
• Cybersecurity Bill 2024. The upcoming Cybersecurity Bill 2024 is anticipated to boost demand for Systech’s cybersecurity solutions significantly, presenting a significant growth opportunity. Legislative support is expected to drive investments in cybersecurity across Malaysia, benefiting Systech’s extensive portfolio in this domain.
• Demand for AI solutions. The growing demand for Artificial Intelligence (“AI”) solutions positions Systech to capitalise on this trend. The company’s focus on AI and digital transformation solutions aligns well with market needs, setting the stage for substantial revenue growth in the coming years.
• New board members. From 1 June 2024, Dato’ Hooi Jia Hao and Dato’ Ng Wei Yee will join Systech’s board to assist with day-to-day operations and actively pursue merger and acquisition (“M&A”) opportunities.

With a current share price of RM0.435, Systech now presents a compelling investment opportunity. Our FV estimate of RM0.610 per share implies a significant upside potential of approximately 40%. This potential upside is underpinned by the company’s strategic acquisitions with profit guarantees, expected benefits from the Cybersecurity Bill 2024, and the growing demand for AI solutions. The addition of experienced board members further strengthens Systech’s prospects, making it well-positioned for future growth and value creation for shareholders.