Cloudpoint Technology's (Cloudpoint) 9MFY24 core earnings rose 9.2% YoY to RM12.7m on the back of stronger earnings contributions from all core segments. The results made up 71.3% of our full-year estimate. We expect to see a strong finish in the final quarter, given that 4Q is usually the peak quarter for the group, as majority of the financial institutions would accelerate their capex spending towards year-end. Meanwhile, the group is set to benefit from the recently passed Cyber Security Bill 2024, which raises the cybersecurity awareness in the public. We reiterate our Outperform call with an unchanged TP of RM1.09 based on 26x FY25 EPS. A first DPS of was declared for the quarter.

• 3QFY24 topline jumped 35% YoY. During the quarter, the group's revenue jumped 34.7% YoY to RM26.4m, led by the project-based segment, comprising three network infrastructure projects in Kuala Lumpur and Selangor as well as two cybersecurity solution subscription projects in Kuala Lumpur. The group's new offering of digital applications and cloud services continues to see stronger growth with sales contribution of RM1.7m on the back of two cloud services projects in Kuala Lumpur. Meanwhile, IT services sales remained steady at RM6.8m.
• Bottomline surged 32.3% YoY. Stripping out expenses for corporate exercise (RM0.1m), the group's core profit jumped 32.3% YoY to RM4.1m, mainly driven by networking and cybersecurity solutions (+24% YoY) and a small pre-tax earnings contribution of RM0.3m from the digital applications and cloud services despite a slight decline in IT services, down 7.7% YoY to RM3.6m, making up 51.4% of the total PBT.
• Acquisition of Unique Central completing soon. Following the conclusion of its Extraordinary General Meeting yesterday, the group had successfully obtained the approval from its shareholders for the proposed acquisition of 75% equity stakes in Unique Central Sdn Bhd and Uniqcen Sales & Services Sdn Bhd. These acquisitions will strengthen the group's penetration into the data centre segment by offering end-to-end data centre solutions, namely, data centre design & infrastructure technologies, engineering services for hyperscalers, hybrid and multi-cloud implementations, as well as artificial intelligence and sustainable data centre solutions. Based on our estimates, it could potentially contribute at least 25% to the group's annual earnings going forward.
• In the midst of transferring to Main Market. The group is in the midst of transferring its listing status to the Main market of Bursa Malaysia Securities, and it is expected to be completed by the first half of 2025.

Source: PublicInvest Research - 26 Nov 2024