KUALA LUMPUR (June 25): Shares in Kronologi Asia Bhd (KL:KRONO) fell to their lowest in nearly four weeks, after the information technology services company reported a 43.43% year-on-year decline in net profit for the first quarter ended April 30, 2024 (1QFY2025).

Kronologi was down 9.4% or four sen to 38.5 sen at Tuesday’s market close, its lowest since May 29. At its current price, the company is valued at RM342.81 million on Bursa Malaysia. Trading volume totalled 6.02 million shares, nearly three times higher than its 20-day moving average.

In a research note on Tuesday, Apex Securities said it expects the group to post better performance in the second half of FY2025, alongside broader economic recovery. It also expects better profit margins following the group’s balance sheet retooling.

“The rapid advancement of generative AI (artificial intelligence) has driven increased demand for data storage,” said Apex Securities. “We anticipate that Kronologi will capitalise on this promising industry trend and benefit significantly from the AI boom.”

The research house downgraded its call for the counter from “buy” to “hold” with an unchanged target price of 44 sen, by pegging a price-earnings multiple of 17 times to forecasted earnings per share (EPS) of 2.6 sen for FY2025.

For 1QFY2025, the company’s net profit fell to RM1.44 million from RM2.55 million a year earlier. Earnings per share fell to 0.19 sen in 1QFY2025, compared to 0.35 sen per share in 1QFY2024.

It attributed the decline in profitability to lower profit from its business operations and higher operating costs — such as solution centre-related expenses — as well as right-of-use assets and lower revenue.

Quarterly revenue was the lowest in two years, declining 8.4% year-on-year to RM57.75 million, from RM63.03 million. Of the quarterly revenue, 70.7% or RM40.83 million was derived from its enterprise data management (EDM) infrastructure technology segment. The remainder was contributed by its EDM-as-a-service segment.