KLSE INVESTORS CLUB wrote a note · May 10 08:10

Rakuten Trade gave SNS a “buy” call with a target price of 54 sen, proposed transfer of listing status to the Main Market.

Having identified artificial intelligence (AI) opportunities in Malaysia, $SNS(0259.MY)$ now expects a meaningful contribution from its newly ventured data centre fit-out business segment.
Besides selling AI super servers, the ICT system and solutions provider is also involved in testing and commissioning as well as operation and management within the premises of data centres. In short, $SNS(0259.MY)$ fills the gap between server manufacturers and server buyers.
The group believes its financial performance will be lifted by the sale of AI super servers based on the selling price of RM1.5 million per unit and a gross profit margin of 15%, which is higher than its existing core business’ gross profit margin of about 5%.
“This is a game changer for $SNS(0259.MY)$ , and it’s a new playground. Generative AI is at the beginning of a supercycle,” co-founder and managing director Ko Yun Hung tells The Edge in an interview.
With more data centres being set up in the country, especially in Johor, he believes there will be growing demand for AI super servers. “We are seeing a lot of potential from this, for the enterprise segment,” he shares, noting that several tech firms have expressed interest in these servers.

$SNS(0259.MY)$ is awaiting the Securities Commission Malaysia’s approval for its proposed transfer of listing status to the Main Market from the ACE Market of Bursa Malaysia, after it met the requirement of having an aggregate net profit of at least RM20 million for the past three to five full financial years, with a net profit of at least RM6 million for the most recent financial year.
The transfer listing is expected to be completed by the second half of the year.
Its net cash position improved to RM89.1 million as at end-January 2024, from RM69.73 million as at end-October 2023. It had gross borrowings of RM32.38 million as at end-January 2024, with a gearing ratio of 0.13 times. $SNS(0259.MY)$ does not have a dividend policy, but it hopes to maintain a dividend payout ratio of about 30%-40%. In FY2024, it paid 0.75 sen dividend per share or a total payout of RM12.1 million, equivalent to a dividend payout ratio of 38%.
Ko and executive director Kelvin Pah Wai Onn each own 32.67% of the company, while executive director Siow Wei Ming holds a 7.33% stake.
Premised on the ongoing AI frenzy, Rakuten Trade gave $SNS(0259.MY)$ a buy” call with a target price of 54 sen based on FY2025 price-earnings ratio (PER) of 15 times, which it says are in line with the company’s industry peers.
The research house expects $SNS(0259.MY)$ FY2024-FY2027 earnings to grow at a robust compound annual growth rate of 39% driven by new AI server sales and continued growth in its existing ICT business, fuelled by consumer device refresh cycles and ongoing digital transformation in education and commerce.