PublicInvest Research

AGMO Holdings Bhd - Digital Application Development Specialist

Publish date: Mon, 08 Aug 2022, 11:14 AM
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Agmo Holdings Bhd (AGMO) is principally involved in the development of mobile and web applications for businesses and companies. Since the commencement of its business and up to 4 July 2022, the group has developed over 100 new mobile and web applications, spread across many industries including healthcare, logistics, oil and gas, automotive, financial services and government agencies. Using several third party cloud computing platforms such as Microsoft Azure, Amazon Web Services and Huawei Cloud, AGMO provides subscription and hosting services of the applications upon deployment, if required, by its customers by bundling such services to its application development services. As at 4 July 2022, AGMO has four applications under its provision of digital platform-based services, namely Vote2U, Eat2U, Agmo Health and Agmo Loyalty.

Moving forward, AGMO plans to set up dedicated teams for specifically designated tasks while expanding its regional presence as well as mobile and web application development and digital platform-based services. We derive a fair value of RM0.33 based on a c. 16x PE multiple to its FY24F EPS of 2.1sen. The IPO is expected to raise approximately RM22.1m from the issuance of 85.0m new shares. Besides utilising 26.8% of the proceeds for expansion of its mobile and web application development and digital platform-based services, 42.8% of the proceeds are allocated for investment in dedicated teams, amongst others.

  • Growth drivers. AGMO’s growth will be dependent on: i) expansion of its mobile and web application development and digital platform-based services, ii) setup of a dedicated technical support and maintenance services division, iii) setup of a dedicated business development team, iv) setup of a dedicated research and development (R&D) division, v) establishment of a training and development centre, and vi) expansion of its regional presence.
  • Competitive strengths. AGMO’s competitive strengths include: i) established track record involving notable customers across multiple industries/ sectors, ii) established in-house proprietary development framework, iii) technical expertise in integrating the latest technologies into its digital solutions, iv) experienced and hands-on key senior management team, and v) established partnerships with its suppliers and industry stakeholders.
  • Catalysts. Key drivers may include: i) digitalised consumer activities, ii) trending digitalisation of businesses, iii) continuous technology advancement, and iv) digital transformation initiatives by the government.
  • Key risks. Key downside risks, among others, include: i) competition from other industry players, ii) availability of suitable talent in the market, iii) expiration of its Pioneer Status, iv) exposure to risk of security breaches, v) potential infringement of intellectual property rights, and vi) fluctuation in financial performance due to nature of its business.

Source: PublicInvest Research - 8 Aug 2022

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