The Daily Pulse of Bursa Malaysia

Cloudpoint on cloud nine, poised for further upside

zaclim
Publish date: Wed, 13 Mar 2024, 11:02 AM
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Cloudpoint Technology Bhd has gone up 21.9% in the past 5 days to 70 sen on Mar 12. The counter saw a whopping 97% premium over its IPO price of 38 sen.

Heightened interest in Cloudpoint is understandable given its robust growth potential. It has a strong track record with local financial institutions, a promising future in the cloud services segment. The company also has an impressive track record of delivering IT solutions to top-tier enterprise clients.

It has already started moving up the value chain, launching and providing cloud services and software applications from giants like Amazon Web Services, Microsoft Azure, Alibaba Cloud, ServiceNow, and Sunline. This has allowed Cloudpoint to offer a broader range of solutions, creating an opportunity for cross-selling to customers and enhancing their overall service delivery.

Nevertheless, there are of course risks of reliance on major customers, whereby the potential for unexpected delays in implementation and order replenishment could be a concern. However, the future appears bright for Cloudpoint, and it certainly is one of the most promising tech stocks to keep an eye on in the near future. It is expected to continue enjoying strong orderbook growth, as it is looking to secure more projects from new and existing customers across all segments.

As it is, its orderbook has jumped by over 50% to bring its total FY23 orderbook to RM60 million mainly thanks to order replenishments from its top five customers. Cloudpoint is set to further build its growth on three technology refresh contracts from its top customers, which are to be carried out in FY23-24. According to management, these projects are typically two to five times bigger than its usual contract values of RM2 million - RM5 million.

Financially, Cloudpoint’s performance has been positive. The company saw its net profit increased to RM16.2 million in the financial year ended Dec 31, 2023 from RM13.1 million in the previous year. This was on the back of improved revenue of RM110.1 million versus RM90.6 million.

However, its fourth quarter just ended registered a decline in net profit to RM5.6 million from RM7.6 million a year ago while revenue slipped to RM31 million from RM41 million. That said, the company still exudes compelling valuations, making it an attractive prospect for investors.

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