VSTECS ready to ride on AI growth

Information and communication technology (ICT) company VSTECS Bhd says it is seeing early-stage orders coming in for pilot testing and equipment provisioning within the data centre (DC) space, and is expecting a ramp-up over the next 24 months as more DCs move from construction to operational readiness.

VSTECS executive director and chief executive officer Soong Jan Hsung says Malaysia’s emergence as a regional DC hub presents a “tremendous opportunity” and VSTECS is well-placed to capitalise on this.

“In fact, we have been in the DC space long before it became a buzzword, supplying DC infrastructure and software solutions to large enterprises on-premises DCs for nearly a decade,” he tells Starbiz 7.

According to Soong, over the years, the company – set up in the 1980s – has established solid partnerships with global principals to offer a suite of DC-related products, including high-performance servers, networking equipment, software and power solutions such as uninterrupted power supply or UPS systems.

“From the rise of personal computing in the 1980s, to the Internet in the 90s and on to today’s artificial intelligence (AI) wave, we have seen technology become indispensable in how people and businesses live, work and connect,” Soong says.

The industry veteran says the group’s growth stems from its ability to read trends and adapt to shifts.

“By partnering with over 50 global principals, we have built a robust portfolio that spans consumer devices and enterprise solutions and this has allowed us to capture demand across diverse markets, driving revenue and profit growth.”

He says over the last few years, the group has been actively building on its strengths, particularly in AI, cloud and DC technologies.

“We secured strategic distributorships with global tech leaders, bringing cutting-edge innovations to both the consumer and enterprise markets in Malaysia.”

When it comes to the readiness of Malaysian enterprises to adopt AI and advanced digital technologies, Soong reckons there is keen interest, but budget and maturity levels vary.

“Large enterprises are already piloting AI, while mid-sized companies are exploring how to incorporate it efficiently and cost-effectively.”

This is where the company’s opportunity comes in.

“We are expanding our portfolio to offer flexible deployment models, including on-premise, hybrid and cloud-based AI solutions,” he says, adding that VSTECS’ ability to support clients at different stages of their digital journey will be a big advantage.

The company is now actively engaging with various ecosystem partners and working towards AI-enabled solutions tailored to different industries and business needs, Soong says.

Enterprise AI — a growing revenue contributor

“As AI adoption gains momentum and real-world applications become clearer, we are optimistic that enterprise AI will become a potential and growing revenue contributor for VSTECS,” Soong says.

He says all three of the group’s core segments (ICT Distribution, Enterprise Systems and ICT Services) continue to deliver a steady run rate business and hold strong growth potential.

However, the most exciting emerging drivers are related to AI.

“This includes AI-enabled devices in the consumer space, as more AI powered laptops and smartphones are launched, enterprise adoption of AI infrastructure and applications, as well as increasing AI investments from the public sector.

“We are already shaping our AI business model and look forward to making some exciting announcements in the near future,” Soong adds.

On the issue of tariffs, Soong notes that the company is an importer of certain US brands and does not export to the US.

“So to-date, tariffs have not had any direct impact on our business. While the possibility of two-way tariffs could lead to price increases, this would impact the entire market rather than being specific to us,” he says.

“More importantly, we work with over 50 global principals across a diverse range of brands (including both US and non-US suppliers) which allows us to offer flexible alternatives to our customers and reduce reliance on any single source, he says.

“Our distributorship model gives us the agility to respond swiftly to changes in market conditions, product availability, and pricing.

“Even if consumers and enterprises opt for lower-priced products, we can provide a comprehensive suite of solutions tailored to any budget.”

Soong says the group’s momentum ahead is “extraordinary.”

“The AI revolution, growing digital economy, and Malaysia’s rising role as a tech hub have opened up a whole new playing field,” he says.

He says the company’s focus remains on deepening its capabilities and market share, expanding its offerings, and staying ahead of market needs.

VSTECS operates through four subsidiaries: VSTECS Astar, which distributes ICT products; VSTECS Pericomp, specialising in enterprise solutions like servers, storage and networking; VSTECS Ku, offering ICT services including system integration, technical support and AWS distribution in Malaysia; and VSTECS Kush, managing shared services for the group, including finance, logistics and operations.

At last look, VSTECS traded at RM3.27 apiece, valuing the entire company at RM1.2bil.

In the last four weeks, it has traded between RM2.85 and RM3.31.

For the first quarter ended March 31, the company made a net profit of RM17.8mil on revenue of RM691.7mil, compared with a net profit of RM14.3mil on revenue of RM616.4mil for the same period, a year earlier.

Based on its latest financial figures, its profit margin stands at 2.6%.