Initial Public Offering (IPO)
IPO - Infoline Tec Group Berhad (Part 2)
MQTrader Jesse
Publish date: Thu, 23 Jun 2022, 04:58 PM
Financial Highlights
The following table sets out a summary of the combined financial information of the Group for the FYE Under Review.
- Revenue reached a new high in FYE 2021 with RM 44 million. This show that the company's market share is expanding in the market.
- The gross profit margin reaches its highest which is 38.20% (FYE 2021). The GP margin decreased in FYE 2019 due to the company offering more competitive pricing to the new customer from the banking sector, to establish a business relationship with the customer. In the IT infrastructure solution segment, a higher subcontractor cost was incurred for the projects that were undertaken during the year. (Generally, a GP margin of 20% is considered high/ good).
- PAT margin grow from 16.1% (FYE 2018) to 17.5% (FYE 2021)
- The gearing ratio is 0.01 times (FYE 2021) mainly due to the increase in the total equity with the PAT of RM7.80 million recorded in FYE 2021. The management team may increase the debt therefore to maximize the resource utilize under a healthy stage. (A good gearing ratio should be between 0.25 – 0.5).
Major customer and Supplier
Major Customers
The Group’s top 5 major customers for FYE 2021
According to the details, the top 5 customers are over 70% of all the customers, and the top 1 customer - Dell group of companies reached 54.7% of the revenue. This show that the company is highly relying on a few companies, especially the top 1 customer. This will cause the company to face high customer concentration risk, and it will cause a serious result when the customer swaps the service to another company.
Major Suppliers
The Group’s top 5 major suppliers for FYE 2021
According to the details, the top 5 suppliers are over 50 % of all the suppliers. The management mentioned they are able to source similar hardware and software from other suppliers, they purchase physical hardware components and software from the above suppliers in bulk to obtain competitive pricing. This also reflects that infoline Tec can easily swap the suppliers to maintain the quality of the hardware and software.
Industry Overview
IT infrastructure solutions facilitate and support the management and usage of digital data. In general, IT infrastructure solutions comprise:
- storage systems that enable storage and backup of digital data;
- network systems that allow for interconnectivity; and
- communication systems that allow users to communicate and collaborate through different avenues such as e-mail, video conferencing, and voice over internet protocol.
Separately, cybersecurity solutions prevent cyber threats and attacks on these IT infrastructures. This includes a variety of solutions aimed at preventing and defending an enterprise’s network and endpoints (such as computers and mobile devices) against cyber threats and attacks.
IT-Infrastructure
The IT infrastructure industry size is depicted by the sales of servers, storage, networking, and powering and cooling hardware as well as required software and services, and includes managed services.
The IT infrastructure industry size increased from RM5.0 billion in 2016 to an estimated RM7.7 billion in 2021, recording a compound annual growth rate (“CAGR”) of 9.0%. Moving forward, the IT infrastructure industry size in Malaysia is forecast to grow at a CAGR of 9.7%, from RM8.4 billion in 2022 to RM10.1 billion in 2024.
Meanwhile, the IT infrastructure industry size in PRC grew from USD61.3 billion (RM254.1 billion1 ) in 2016 to an estimated USD140.5 billion (RM582.4 billion2) in 2021, recording a CAGR of 18.0%. Moving forward, the IT infrastructure industry size in PRC is forecast to grow at a CAGR of 18.4%, from USD166.7 billion (RM691.0 billion3) in 2022 to USD233.7 billion (RM968.8 billion3) in 2024.
Cybersecurity
The cybersecurity industry in Malaysia is depicted by the sales of cybersecurity hardware, software, and services (including managed cybersecurity services) in the country. The total cybersecurity industry grew from RM1.8 billion in 2016 to RM3.3 billion in 2021 at a CAGR of 13.1%. Moving forward, the total cybersecurity industry in Malaysia is forecast to grow by a further CAGR of 14.4%, from an estimated RM3.8 billion in 2022 to RM4.9 billion in 2024.
The cybersecurity industry in Malaysia is largely driven by sales of cybersecurity services which include services such as penetration tests, consulting, and on-site technical support as well as managed security services. In 2021, cybersecurity services comprised 72.1% of the total cybersecurity industry in Malaysia. Meanwhile, spending on cybersecurity hardware and software comprised 12.7% and 15.2% respectively of the total cybersecurity industry in Malaysia in 2021. Spending on cybersecurity services (which include managed cybersecurity services) and software has been growing at a relatively faster pace as compared to spending on cybersecurity hardware. Between 2016 and 2021, spending on cybersecurity services and software grew at CAGRs of 12.9% and 14.8%, while spending on cybersecurity hardware grew at a CAGR of 12.4%.
The cybersecurity industry in PRC, as depicted by the sales of cybersecurity hardware, software, and services (including managed cybersecurity services) in the country, grew from USD4.2 billion (RM17.4 billion1) in 2016 to USD9.7 billion (RM40.2 billion2) in 2021, recording a CAGR of 18.2%. Moving forward, the cybersecurity industry in PRC is forecast to grow at a CAGR of 19.1%, from an estimated USD11.5 billion (RM47.7 billion3) in 2022 to USD16.3 billion (RM67.6 billion3) in 2024.
The cybersecurity industry in PRC is largely driven by sales of cybersecurity hardware. In 2021, spending on cybersecurity hardware and software comprised 47.4% and 25.8% respectively of the total cybersecurity industry in PRC 2020. Meanwhile, cybersecurity services (which include managed cybersecurity services) comprised 26.8% of the total cybersecurity industry in PRC. Spending on cybersecurity services and software has also been growing at a relatively faster pace as compared to spending on cybersecurity hardware in PRC. Between 2016 and 2021, spending on cybersecurity services and software grew at CAGRs of 16.7% and 29.0% while spending on cybersecurity hardware grew at a CAGR of 14.9%.
Source: Providence Strategic Partners SDN BHD
Business strategies and prospects for INFOLINE TEC GROUP BERHAD
The following strategies have been identified as a means to strengthen the position as an IT infrastructure and cybersecurity solution provider by leveraging the competitive strengths:
- The company intends to enhance the facilities and services to increase the capacity and capabilities for providing managed IT services
- The company intends to set up a technology centre and a disaster recovery centre to improve its sales and marketing activities and strengthen its presence in Malaysia
- The company plans to expand its geographical presence in Malaysia and in international markets
MQ Trader View
Opportunities
- Low debt company. As the gearing ratio is 0.01 times, the company can avoid any unexpected accident, especially since the BNM is ready to increase the OPR rate at this period.
- Strong financial result. The company revenue keeps growing and maintains the growth in gross profit margin and net profit margin.
- The management team has a full plan for expanding the business. For example, enhance the facilities and services to increase the capacity and capabilities for providing managed IT services, set up a technology centre and a disaster recovery centre to improve its sales and marketing activities, and strengthen its presence in Malaysia.
Risk
- High customer concentration risk. The company is highly relying on a few companies, especially the top 1 customer. This will cause the company to face high customer concentration risk, and it will cause a serious result when the customer swaps the service to another company and expands its geographical presence in Malaysia and in international markets.
Click here to refer back on the IPO - Infoline Tec Group Berhad (Part 1)
Community Feedback
We encourage traders to try out and evaluate the MQ Trader system and provide us feedback on the features you like to see in the system. We have received many positive feedbacks so far, and we are currently compiling and reviewing them for possible inclusion into the next release of the system.
We would like to develop this system based on community feedback to cater for community needs. Thanks to all those who have provided valuable feedback to us. Keep those feedbacks coming in!
Disclaimer
This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.
Join us now!
MQ Trader stock analysis system uses Artificial Intelligence (AI), various technical indicators and quantitative data to generate accurate trading signals without the interference of human's emotions and bias against any particular stock. It comprises trading strategies which are very popular among fund managers for analysing stocks.
MQ Trader stock analysis system is SPONSORED for MQ Trader members. To use this amazing tool, you can sign up via MQ Trader Sign Up!
Contact us
Please do not hesitate to contact us if you have any enquiry:
Facebook: https://www.facebook.com/mqtrader
Instagram: https://www.instagram.com/mqtrader
i3messanger: https://messenger.i3investor.com/m/chatmq
YouTube: https://www.youtube.com/channel/UCq-26SGjlQTVQfO7DoEihlg
Email: admin@mqtrader.com
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Initial Public Offering (IPO)
IPO - MKH Oil Palm (East Kalimantan) Holdings Berhad (Part 4) - Discover the Growth Potential of MKH Oil Palm!
Created by MQTrader Jesse | Apr 12, 2024
Discover the Growth Potential of MKH Oil Palm!
IPO - MKH Oil Palm (East Kalimantan) Holdings Berhad (Part 3) - Why is MKH Oil Palm (East Kalimantan) Holdings Berhad a highly potential plantation company?
Created by MQTrader Jesse | Apr 08, 2024
MKH Oil Palm (East Kalimantan) Holdings Berhad (MKHOP) represents an intriguing addition to the Malaysian stock market as a new IPO company. The firm has strategically selected land that is exceptio..
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
MQ Trading Signals
Time
Signal
Duration
Type
2024-04-24 09:00:00
EMA 5
Hourly
BUY
Apps
Top Articles
1
Koon Yew Yin's Blog
2
4
5
6
save malaysia!
7
8
Koon Yew Yin's Blog
Eversendai Corporation made a remarkable comeback in FY2023 - Koon Yew Yin
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
