Strong sales of ICT products and services expected

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THE demand for ICT products and services is expected to remain strong this year due to the 5G roll-out, hybrid arrangements, digital banks and consumers keeping up with the latest trends.

According to M&A Securities head of Corporate Finance Gary Ting, Covid-19 may have boosted the sales of ICT products and services due to work from home (WFH) arrangements, which may eventually be replaced or upgraded.

“As the products will be replaced, or upgraded, often to enhance the efficiency of operations, improve productivity and reduce maintenance costs of all devices.

“As such, the current consumption will continue to keep up with the latest technologies and change the devices frequently. Thus, the demand for ICT products and services is expected to remain strong moving forward,” he said in his speech during the launch of SNS Network Technology Bhd’s IPO launch today.

SNS Network Technology MD Ko Yun Hung also said that the government’s decision to implement 5G technologies and various transformation programmes has also encouraged more businesses to adopt digitalisation in their operations.

He believes the hybrid events will also drive the demand for ICT products and services.

“We will see strong growth in all the offices to turn themselves into hybrid working spaces and the same goes to the schools. So, I think all this will help us to grow the post-pandemic.

“Of course, in Malaysia, you will see we have a good 5G initiative, where the government is stepping up for 5G, and there is a digital banking licence that has already been awarded,” said Ko.

SNS Network Technology’s revenue increased from RM594 million in 2019, RM675 million in 2020, RM721 million in 2021 and finally RM1.1 billion in 2022.

The group has recorded a profit before tax of RM35.9 million this year.

“Our sales for ICT products segments contribute about 98% to 98.9% of our total revenue, whereas for a segment on the provision of device repair and related services as far as sales or corporate services is contributing about 1.1% to 2%.

“As for geographical segmentations you can see here, the Malaysians are contributing more than 89.3% for the financial year 2021 (FY21) and 86.2% in FY22 for sales channel comparisons.”

This is also in tandem with the National Tech Association of Malaysia’s expectation on gadget sales which they expect a slow pick-up rate after a good performance in 2021 due to WFH arrangements and online lessons.

Gadget sales were more robust in the fourth quarter of 2021 which grew 4½ times compared to the first Movement Control Order in the same week.

Meanwhile, the firm plans to open an 18-storey regional hub in Petaling Jaya, Selangor, with a built-up area of approximately 260,000 sq ft.

“The regional hub will include an experience centre for SNS Network Technology to showcase new and innovative ICT solutions on the Internet of Things.

“For example, there will be a smart home, smart retail, smart applications, smart signages and smart shelving etc. It will also have a storage facilities service centre, live video area Training Centre worship and office facilities,” Ko explained.

The hub is expected to be operational by 2026.

Today, SNS Network Technology has launched its IPO with 362.9 million new shares which are 25 sen per share which represents 22.5% of its enlarged share capital.

Of the 362.9 million new shares, 80.6 million new shares will be made available to the Malaysian public via balloting, 48.4 million new shares for its eligible directors, and persons who have contributed to the success of SNS Group under the Pink Form Allocations; 201.6 million new shares are reserved for private placement to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI) while the remaining 32.3 million new shares will be placed out to selected investors. 

SNS Network Technology’s existing shareholders will offer to sell 48.4 million existing shares to selected investors by way of placement and is also expected to have a market capitalisation of RM403.2 million.

The group aims to raise RM90.7 million of its IPO proceeds for its capital expenditure of RM33.4 million (36.9%), to expand its device-as-a-service (DaaS) subscription-based service and RM2.5 million to set up 10 new retail stores in the Klang Valley, Johor and Penang.

Its remaining proceeds will be used for bank loan repayments amounting to RM20 million (22%), RM13.1 million (14.5%) for general working capital, RM1.5 million (1.7%) to fund the marketing activities for JOI® while the remaining RM4.7 million (5.1%) to defray the estimated listing expenses.

SNS Network Technology is expected to debut on the ACE Market on Sept 2.

On top of SNS Network Technology, other ICT related companies such as VSTECS Berhad and G3 Global Berhad is also expected to be benefited from the digital transformation of the country.