SNS Network Technology Berhad (“SNS”), the ICT system and solutions provider is making its market debut on Bursa Ace Market on today. Throughout its 24 years journey, SNS was appointed by notable distributors such as Apple, HP, Intel, Microsoft and Samsung. Coupled with rising demand for ICT solution due to workplace digitalisation, we expect SNS to register net earnings of RM31.8m and RM38.8m for FY23 and FY24 respectively. BUY with a TP of RM0.36 premised on 15x PER, 50% discount to its listed peer on Bursa Malaysia due to smaller market capitalisation.

SNS has a wide range of ICT products with 33,633 stock keeping unit (SKUs), with 363 SKUs under its house affordable brand name JOI®. The Sales of ICT Products made up of 98.9% of the group revenue and the remaining revenue contribution came from Device Repair and related Services, as well as Sale of Broadband Services. The group revenue and net profit after tax has registered 3-years CAGR of 23.2% and 58.0% respectively in FY22.

The commercial channel which contributed 72.7% to total revenue in FY22, will continue to be the main growth driver. With the new era of subscription-based IT service, DaaS, SNS will be able to recognise recurring income for 5 years per subscription. As of April 2022, SNS has enrolled 77 DaaS subscriptions worth RM235.55m. TM was one of the major clients with 45.1% revenue contribution and this strong collaboration was built over the past 19 years. SNS has been appointed as Apple Authorised Service Provider since 2014, marketed as “iTworld”. SNS’s physical store channel comprises of 56 brand-specialty stores and 7 multi-brand concept stores across Malaysia.

SNS has recently obtained government projects worth RM99.8m to supply tablets to B40 students across Peninsular Malaysia. The supply for northern states including Perak, Perlis, Kedah and Penang will be distributed to B40’s full-time students, starting from September 2022.

Of the RM90.7m IPO proceeds raised, RM 30.9m will be utilised for DaaS expansion, RM18m will be used to set up regional hub to showcase new and innovative ICT products and solutions on Internet of Things. Additionally, SNS Network plans to utilise RM2.5m to set up 10 new brand-specialty stores and/or multi brand concept stores within 24 months SNS also plans to strengthen the brand recognition of JOI® through social media and radio broadcast advertisement with RM1.5m.

Post listing, its gearing ratio will reduce from 0.54x as at FY22 to 0.17x. The company has no dividend policy at this juncture.

Source: Rakuten Research - 2 Sept 2022