SNS still a “baby” in BURSA stock market. Their debut in 2022 turned flat with just 1.5sen raised on the listing day. Many speculate it is because the number of shares was hefty causing its hard to soar higher. It remained a flat share for close to two years with it traded only between 0.215sens to 0.295sens. Other factor could possibly cause SNS the “unfavourable” stock back then was the business they do was considered not really in demand. Their non direct peer VSTECS was a flat share too despite all the big potential they could offer.

Hey, how could we, everyone, or every company could think we do not need ICT in our life while since pandemic era we are 100% relying on ICT needs?

The rise of gigantic theme of AI and Data Centre turned a big leap for SNS

Now this is where the aggressive move begins.

Towards final quarter of 2023, SNS formalised its collaboration with Seagate Technology to provide enterprise data storage solutions as part of their services. This marks a significant milestone for SNS to enhance capability as a leading ICT system and solution provider.

In February 2024, SNS has secured a contract from Esri Malaysia Sdn Bhd to offer geographical information system (GIS) solutions. This collaboration will allow SNS to foster smart city initiatives in Malaysia which align with Government move towards Digital Transformation.

In facilitating AI adoption and integration SNS act as a crucial link between server manufacturers and buyers. 

Just like an egg waiting to hatch after years of incubate, the stock had a bullish breakout in early April 2024. Climbing healthily and continuously since 0.295sen up to 0.905sen (at 10th July close price). This nonstop uptrend movement is supported with strong catalysts that SNS planned for the next couple of quarters.

Groundbreaking catalysts/ factors for the rise of SNS are:

- Plays pivotal roles in enabling AI integrations.

- Excel in other segments such as data centre fit-out, testing, commissioning, and operation management.

- Partnership with Supermicro that aligns with Supermicro’s expansion in Johor.

- Vstecs appoints SNS as authorised Starlink equipment retailer in Malaysia.

- SNS gets SC nod to transfer to main market. This enhances the group reputation, confidence, and acceptance amongst investors. The shares has been transferred to main market on 13 June 2024.

- SNS signed MOU with Agmo. This collaboration to explore potential in digital transformation services.

- Signed partnership agreement with Healthcare Information Management Systems Society (HIMSS). This will strengthen customer base to the healthcare industry.

Optimistic business outlook

The company has secured RM85.52 million purchase order for AI super servers from a leading e- commerce platform in S.E Asia and Taiwan. This order is to supply a data centre located in Johore Bahru and are expected for delivery in August 2024. To highlight to you, Johore Bahru is the fastest growing market for data centre in S.E Asia.

The growing demand of AI super server, could uplift SNS financial performance with gross profit margin of 15% which is higher than the existing core business (which contribute gross profit margin 5%). So, combining both AI frenzy and its existing commercial channel remains major contributor for the revenue, it is anticipated SNS earnings to grow for FY2024-FY2027 at CAGR 39%

SNS also maintain a solid balance sheet, with a gearing ratio of 0.13 times as of 4Q FY2024. Together with 3% FY2025F dividend yield, SNS is an attractive proposition at 11 times FY2025F per earning ratio. As of today, the increased 369% market capitalization derived from an increase of PE from 8.1 to 52.47.

The future is bright and diverse. With more data centre being set up in the country, the demand for Ai super servers will continue to be strong for the next few years. On going, SNS has upgrade their offerings including cloud computing and cybersecurity solutions.

I foresee more to come for SNS. As many analysts quoted, the worst is over for technology sector. This connotation applies to darling SNS with in near term there is still 60% chance the price to go higher from its current value after one year. To support this statement, order book already hit above target, strong revenue growth driven by expansion plans and strategic contracts to be announced soon.

Warm regards,

Lily of the Valley