Why Did I Add Systech (0050) into My Portfolio Now?

With the technology sector seeing significant pressure, I noticed this company — Systech might be selling at a discount as they have some significant developments lately.

Share price wise, this company also saw strong support (double bottom formation) at around 31.5 sen level, which may be the indication of a good entry point.

Let us dive a bit deeper in Systech.

● Originally, Systech runs Internet of Things (IoT) and cybersecurity businesses. However, the company has not been very profitable in the past.

● In 2023, Systech sees the emergence of new substantial shareholders with a game changing plan for the company, including phasing out non-profitable businesses.

● Subsequently, Systech acquired 80.0% of Cloudtalent AI for RM14.4 million, which provides a profit guarantee of RM1.5 million.

● To enhance the profitability of the company, Systech further acquired another company, Wilstech for RM75.0 million with part share, part cash basis, which would bring Systech another profit guarantee of RM5.0 million.

● Given the strong demand for data centres in Malaysia, Systech has in June 2024 collaborated with Eh Integrated Systems, who is a distributor for SuperMicro and Nvidia’s GPU and servers, to develop and operate data centres.

● Furthermore, Systech went into a Heads of Agreement (HoA) to acquire MDT Innovation, a mega-sized IoT company, but pending more information to be disclosed.

● Lastly, Systech has signed another collaboration agreement with Pinetop Technology Venture to co-develop and operate an AI-based data centre.

With all these developments, it seems like the market has not banked on (i) the future profit guarantee of the acquired companies and (ii) data centre development.

Maybe, you should add Systech to your portfolio, too?