Is CLOUDPT 0277 CLOUDPOINT TECHNOLOGY BERHAD fizzling out or surging ahead?
Cloudpoint Technology Bhd appears to be fizzling out after it closed at a 35.5% premium over its initial public offering (IPO) price of 38 sen per share on its debut on the ACE Market on May 29.
Since touching its high of 75 sen, the IT solutions provider has lost some 33% value to close at 50 sen on June 16.
If you are tracking the counter based on technical charts, you would probably find Cloudpoint to be looking good and ripe for a meaningful reversal.
Based on fundamentals, Cloudpoint is in a good space.
It provides comprehensive solutions encompassing design, procurement, implementation, support, and after-sales maintenance.
Cloudpoint said its clientele includes large enterprises such as financial institutions, telecommunications companies and technology service providers in Malaysia.
For the first quarter ended March 31, 2023 (1QFY2023), Cloudpoint’s net profit tripled to RM3 million, compared with RM933,000 a year earlier.
Revenue for 1QFY2023 rose to RM19.40 million, versus RM10.25 million previously, thanks to recurring and project-based incomes.
Its business is driven by the increasing need to invest in new technologies to enhance business agility and competitiveness.
As such, there is a surge in need for better security and cyber defences, cloud computing, and software modernisation.
According to Hong Leong Investment Bank, Cloudpoint is well-positioned to capitalise on the rising demand for cybersecurity and digitalisation trend.
It focuses on financial institutions, which accounted for 88.7% of its FY22 revenue.
Cloudpoint’s cybersecurity segment posted a CAGR of 50.7% in FY19-22.
The research house anticipates the core net profit to grow at a CAGR of 18.3%.
Even prior to its listing, Cloudpoint attracted overwhelming investors interest.
Its IPO was oversubscribed by 112.94 times by the Malaysian public.
The issue price of 38 sen per share is valued at the price-earnings multiple of about 15.38 times based on its EPS of 2.47 sen for FY2022.
The company is likely to continue charting good growth as it invests in business expansion.
It has earmarked some RM13.3 million for expansion while RM15.8 million will go towards working capital.
There is indeed a heightened demand for cybersecurity solutions but whether Cloudpoint can stay ahead of the curve will be only be seen in years to come.
In the meantime, this counter appear to be an interesting bet as it is operating in a growing space.
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