Through its wholly owned subsidiaries, VTC which is scheduled for the ACE Market listing in quarter three is primarily involved in enterprise IT solutions, including the provision of implementation services, maintenance, support and professional services as well as resale of hardware and software.

Malacca Securities in its reports said it derived a fair value of RM0.51 (an upside of 104% against the IPO price of RM0.25) for VTC. This fair value is derived by pegging a P/E ratio of 24.0x to the FY25f EPS of 2.14 sen. Although the peer average forward P/E stood at 16.2x, the house believes VTC may pegged to higher P/E of 24.0x given its strong PAT margin of more than 28% in FY23 (as compared to average peer margin of 8.8%), coupled with the AI-theme upcycle environment.As of the latest practicable date (LPD), Vetece Holdings Bhd (VTC) has 80 IT solutions personnel.

MSSB said it projects the revenue to grow at 8.5-30.0% to RM25.1m-RM39.2m for FY24-26f, while the core net profit is expected to increase by 7.3-20.3% to RM7.0m-RM9.6m, supported by the management's aim to take on more complex jobs, higher margins and continued demand in the telecommunication and banking sectors

It said in a note today (Aug 12) that the group plans to use its IPO proceeds to hire an additional 4 IT professionals and 2 sales and marketing personnel.

Also, the house said that VTC could potentially partner with 2 new or existing technology partners, and RM2.19m is earmarked for this expansions.

The house said that the group has consistently improved its PAT margins, increasing from 15.66% in FY21 to 28.38% in FY23, and currently standing at 26.49% as of FPE24.

Looking ahead, they expected VTC's margins to remain relatively stable, in line with the group's positive outlook.

RHB noted that the future of network choices for telcos and their customers is becoming increasingly diverse due to rapid technological advancements.

As of FY23, RHB said that the Telecommunications segment accounts for 46.92% of the group's revenue.

Given the rapid advancements in telecommunications technology, these developments are expected to positively impact the demand for IT services, positioning VTC well for future growth.

Establishment of a Centre of Excellence (COE) for productivity and cost-efficiency. RHB said that the group plans to establish a Center of Excellence (COE) for software solutions, enabling them to undertake projects for overseas clients remotely from Malaysia. The COE, designed to meet IT security standards, will appeal to overseas clients seeking cost-effective IT solutions without compromising data security.

RHB believes that this will allow the group to offer more competitive pricing to prospective clients.