LGMS: Cybersecurity expert

A cybersecurity expert.  Listed on the ACE market in June 2022, LGMS is one of the region’s leading cybersecurity firms, anchored by its three primary business pillars: (i) cyber risk prevention services; (ii) cyber risk management and compliance services and (iii) cyber threat and incident response services (see figure#1 for earnings breakdown). Within the prevention services segment, LGMS offers vulnerability assessment and penetration testing to their customers with the aim of identifying vulnerabilities and cyber threats, and prescribing the relevant recommendations to fix the loopholes identified. What sets LGMS apart is their commitment to neutrality, as they neither represent any product brand nor actively engage in the sale of cybersecurity hardware and products. This stance has established LGMS as the preferred independent provider of professional cybersecurity services, boasting renowned clients such as Alibaba Cloud, Time dot Com and Measat, amongst others.

Riding on the growing need of cybersecurity. The cybersecurity market is in a constant state of evolution to address the ever-growing sophistication of cybercrime. According to Fortinet, Malaysia encountered 57.8m virus attacks in 1Q22, and this concerning trend is on the rise. As the adoption of digitalisation accelerates across the globe, the need for cybersecurity infrastructure is no longer an option but necessity. This transition plays to the advantage of LGMS. It is worth noting that vulnerability assessment and penetration testing are rarely kept to a one-time effort only.

Meanwhile, the group’s recently launched “Project Mercury” is poised to be a catalyst for the group's future earnings growth. Project Mercury conducts security assessments of merchants' websites and platforms, subsequently issuing ratings and PCI certification (to be renewed annually) without the need for human intervention – resulting in cost saving for clients. The launch of this product is especially significant as payment card networks like Visa and Mastercard intensify their scrutiny of payment processors, ensuring both merchants and payment processors adhere to PCI DSS compliance standards.

Trading on long-term support. Technically, LGMS is trading on its long-term support area of RM1.00-1.07. A successful breakout above RM1.14 resistance will spur the share price toward RM1.20-1.27-1.38. Cut lost at RM0.89.

Collection range: RM0.93-1.01-1.03

Upside targets: RM1.14-1.27-1.38

Cut loss: RM0.89

Source: Hong Leong Investment Bank Research - 23 Oct 2023