KUALA LUMPUR (April 15): Rakuten Trade has rated SNS Network Technology Bhd a “buy” at 41 sen, with a target price (TP) of 54 sen based on FY2025F price-earnings ratio of 15x, in line with industry peers.

In an investment idea note on Monday, the research house said Malaysia's favourable conditions, including abundance of land and power resources, excellent international connectivity and supportive government policies, mean it is now an attractive destination for data centre (DC) investments.

It said Juwai IQI's report has highlighted Malaysia as the fastest growing market, projecting a remarkable 600% growth in AI-driven data centre expansion over the next five years.

“Recognising the potential of AI across various sectors in Malaysia, SNS positions itself as a facilitator of AI adoption.

“Acting as a liaison between server manufacturers and buyers, SNS plays a pivotal role in enabling AI integration in Malaysia,” it said.

Rakuten said it believes SNS' financial performance to show exponential growth.

“With an average selling price per unit of RM1.5 million and a gross profit margin of 15%, the company anticipates robust revenue generation.

“As of Q4FY24, SNS has sold 21 units of AI server, with a target to sell 300 units in FY25F.

“Thus, we expect FY24-FY27F earnings to grow at a robust CAGR of 39% driven by new AI server sales and continued growth in existing ICT business, fuelled by consumer device refresh cycles and ongoing digital transformation in education and commerce,” it said.