PETALING JAYA: Vstecs Bhd
’s diverse end customer base reduces risk of over reliance on a single large customer, giving it stability throughout economic cycles while adding strength to its solid financial performance.
According to UOB Kay Hian (UOBKH) Research, Vstecs will benefit from a diverse end customer base encompassing the retail market, financial, telecommunications, public sector, energy, and other sectors, with the top five clients contributing about only 25% of its revenue.
“Since its inception as a distributor of personal computers in 1985, Vstecs has evolved into a distributor of information and communication technology (ICT) products, enterprise systems and ICT services provider, boasting a diverse clientele base and 4,000 resellers and channel partners.
“The group has been constantly forging strategic partnerships with global information technology giants,” the research house said.
It said the company registered a three-year compound annual growth rate core net profit of 22% in 2023, thanks to its expansion vertically and horizontally.
“On top of the organic growth from device refreshment cycle, it is enjoying the low-hanging fruit from the burgeoning data centre expansion and cloud migration in Malaysia.
“It is trading at 12.6 times 2023 price-earnings, an undemanding valuation which is at a 19% discount compared with peers,” the research house added.
Notably, the research house said Vstecs has achieved uninterrupted profitability for the past 38 years by effectively managing a vast inventory of more than 100,000 stock keeping units.
It has a market share of 50% to 60% of the brands it represents.
