Daythree Digital stands to benefit from rising global business service business

Daythree Digital Bhd looks to be trending higher, having closed above 40 sen resistance level recently.

The counter could move towards its near-term resistance level is seen at 45 sen, followed by 50 sen.

Investors will be hoping Daythree Digital could reach its high of 73 sen when it was listed in July last year.

The counter made its debut on the ACE Market of Bursa Malaysia at an IPO price of 30 sen a share.

On a year-to-date basis, it has risen some 12.5% to 40 sen on July 1.

The tech-driven global business service (GBS) provider raised RM33.1 million in the listing exercise.

It wants to accelerate its business expansion to leverage the positive prospects in Malaysia's GBS sector.

Daythree Digital expected the country's GBS sector to grow at 6% per annum over the next five years.

In terms of financial performance, the company has demonstrated consistent growth.

Its revenue grew from RM37.5 million (FYE 2019) to RM89.9 million (FYE 2023), indicating a robust expansion of market share.

Daythree Digital has maintained a gross profit margin exceeding 20% over the past four years, underscoring the high value-added nature of its services in the market.

The Group’s revenue of RM89.9 million in FY23 was mainly contributed by energy and utilities segment which accounted for RM39.9 million, representing 44.4% of the total revenue.

The Group recognised profit before taxation of RM10.8 million for FY23 after deducting administrative expenses, other expenses and finance cost of RM11 million.

Excluding non-recurring listing expenses of RM1.2 million incurred in FY23, the adjusted normalised profit before taxation would be RM12 million.

Daythree Digital recognised profit after taxation of RM7.6 million for FY23 reflecting a deduction of RM3.2 million in tax expenses.

The gross profit margin has increased from 20.9% in the fourth quarter last year to 23.7% in 4QFY23.

The increase in gross profit margin was mainly due to improvements in operational efficiency in 4QFY23.

The rising interest in the counter could stem from heightened demand for everything digital and this could be driving its share price even higher.