SNS rides on healthy ICT demand

SNS Network Technology Bhd, which reported a nearly threefold increase in net profit to RM10.2mil in the first quarter ended April 30, remains optimistic about growth due to rising demand for information and communication technology (ICT) products and services.

Managing director Ko Yun Hung (picture) attributes this positive outlook to the company’s strengthening customer base and expanding market share.

“We see several key opportunities this year that support our positive outlook,” he tells StarBiz 7.

“First, a few data centres are expected to be completed this year.

“These developments are likely to open up more opportunities for us to supply ICT hardware and artificial intelligence (AI) infrastructure solutions to the tenants of these facilities,” Ko says.

“Organisations across sectors are also rapidly adopting new technologies. This is reflected in the robust growth of our eCommerce sales channel, indicating strong consumer demand for ICT devices,” he adds.

Additionally, many devices purchased during the 2020-2022 pandemic period are approaching their replacement cycle, boosting demand for the company’s products and services even more.

“Although we are unable to provide specific information about our future financial performance, we are encouraged by the steady growth in ICT demand in the past one to two years, particularly in the commercial segment.

“As a result of these positive indicators, we are hopeful that the group’s performance will continue to improve in the year ahead,” Ko adds.

SNS sells hardware, software as well as system and network solutions. It also provides repair and broadband services and has retail operations which include brand and concept stores.

Ko reckons that AI will play a significant role in the company in time to come.

It already offers AI-driven solutions that he says will “enhance operational efficiency and deliver personalised customer experiences”.

In line with this, SNS has also launched the SNS AI Factory which according to Ko, is Malaysia’s first locally hosted, fully-managed AI cloud infrastructure service powered by 64 Nvidia Hopper graphic processing units.

“This initiative not only enhances local access to cutting-edge AI infrastructure but also positions the group at the forefront of AI innovation in Malaysia, supporting national aspirations for technological advancement, talent growth, and ethical AI development,” Ko says.

Nevertheless, there are challenges aplenty within an industry such as this.

Not without challenges

“One of the key challenges we face in Malaysia is labour market pressure, especially the outflow of talent to neighbouring countries such as Singapore.

“This talent migration creates a ripple effect, making it more difficult to retain and recruit skilled professionals locally, particularly in the ICT sector,” Ko laments.

Another key issue is increasing competition. “The ICT industry is highly competitive – there are no monopolies or exclusive territories,” he says.

“While this means we compete with other system integrators and sometimes even brand principals, it also presents opportunities.

“The absence of exclusivity means the market remains open, and we can penetrate segments that were previously untapped. We view this as a chance to expand our footprint by offering differentiated solutions,” he says.

One way in which the group differentiates itself is by gaining deep understanding of customer needs and challenges, and by delivering end-to-end ICT and AI solutions that bring real, measurable value, Ko adds.

“Our strength lies in our ability to solve problems, not just sell products – and that is where we build trust and long-term relationships.”

Based on the latest quarter’s financial results, the company’s profit margins were only slightly more than 1%, with net profit at RM10.2mil and revenue at RM822.8mil.

“Our current margins may appear thin, which is common in the ICT hardware space, especially in a highly competitive market like Malaysia,” Ko says.

He notes that while hardware sales typically carry low single-digit margins, the company plans to improve overall profitability by scaling its value-added services.

“We are working with five global players – Dell, Lenovo, Supermicro, Kaytus and MSI. Our strategic focus is to establish a strong presence within the growing ecosystem of data centre tenants.

“We believe this is just the beginning. Subsequent procurement phases will offer opportunities to expand into higher-value services with better margins,” he adds.

On the ongoing issue of global tariffs, Ko says SNS is not directly affected as its primary customer base is in Malaysia, which contributes over 95% to the group’s total revenue.

“However, we are aware of the indirect impact that broader geopolitical and macroeconomic factors can have on the overall supply chain and business environment,” he says.

Still, Ko notes that these challenges are not unique to SNS as they affect the industry as a whole.

“Rather than focusing on what’s beyond our control, we remain committed to capturing opportunities within Malaysia’s growing ICT sector.”

At last look, SNS shares were at 60 sen apiece, valuing the entire group at more than RM1bil. In the last 52 weeks, the stock traded between 34 sen and 96 sen.