INFOTEC : Uptick Bias

As a leading IT solution provider with a presence in the APAC region, INFOTEC is poised to capitalize on the anticipated growing demand for IT infrastructure and cybersecurity solutions.

Cybersecurity segment (4% of FY23 sales). The cybersecurity segment is poised to be the main growth driver for FY24. A key factor boosting the cybersecurity solutions’ demand is the impending gazettement of Malaysia's cybersecurity bill. Aiming to bolster national cybersecurity and safeguard Malaysia’s digital infrastructure against cyber threats, the bill establishes cybersecurity standards that organizations classified as National Critical Information Infrastructure must adhere to. Failure of companies categorized under NCII to comply with these cybersecurity standards will result in fines and potential imprisonment for company directors. Given this regulatory landscape, INFOTEC is well positioned to capitalize the burgeoning demand for cybersecurity solutions post-passage of the bill.

IT infrastructure segment (57% of FY23 sales). INFOTEC’s IT infrastructure sales is expected to record steady growth in FY24, driven by strong order flows from both existing and new customers. For uninitiated, INFOTEC’s IT infrastructure sales are primarily driven by several key factors: (i) the expansion and upgrade of IT infrastructure for existing customers, (ii) the on-boarding of new customers, and (iii) tech refreshes for existing customers. Recent discussions with management indicates that INFOTEC has secured several new local and multinational companies, who are currently undergoing IT infrastructure deployment. These new clients have outdated IT systems, making them a significant growth driver for FY24. Moreover, the increasing sophistication of IT infrastructure has shortened the tech refresh cycle and increased the value of each project, presenting INFOTEC with more contract opportunities in the long run.

Uptick Bias. INFOTEC is currently trading within its support range of RM0.76 to RM0.79, with indicators showing an uptick bias. A successful breakout above RM0.83 hurdle will spur the share price toward RM0.88-0.90-0.92 levels. Cut loss at RM0.73.

Collection range: RM0.76-0.77-0.80

Upside targets: RM0.88-0.90-0.92

Cut loss: RM0.73