Malaysia Trading Idea

20 June 2023 Technology | Hardware & Equipment Software

Cloudpoint Technology (CLOUDPT Not Rated

MK) Fair Value (Return): MYR0.79 (+52%)
Price: MYR0.52
Riding On The Digital Transformation Of Banks Market Cap: USD59.7m
Avg Daily Turnover (MYR/USD) 19.0m/4.13m
 MYR0.79 FV implies 19x FY24F P/E. We like Cloudpoint Technology for its Analyst
strong client profile, wide range of solutions and vendors, and asset-light
business model. It is well-positioned to benefit from its principals’ innovations, Queenie Tan
higher-level sophistication in threats, regulatory compliance and robust +603 9280 8873
financial institutions’ (FI) investments in digitalisation. It is trading at a [email protected]
compelling 12x FY24F P/E – on top of an above-industry ROE of 28%, 3-year
earnings CAGR of 29.4%, a strong orderbook (0.94x cover ratio), new
customer acquisitions, and the expansion of its business and product range.
 Growing orderbook. According to its prospectus, Cloudpoint’s orderbook
target for FY23 was c.MYR39m. We understand that this has surged by over
50%, to bring its total FY23F orderbook to c.MYR60m – a result of strong Share Performance (%)
order replenishments from its top five customers over the last two months. We YTD 1m 3m 6m 12m
expect the strong orderbook growth to continue, as it is looking to secure more Absolute 0.0 0.0 0.0 0.0 0.0
projects from new and existing customers across all segments from its robust Relative 0.0 0.0 0.0 0.0 0.0
tenderbook.
52-wk Price low/high (MYR) 0.38 – 0.54
 Expecting three FI technology refresh contracts. Cloudpoint is set to
further build its growth on three technology refresh contracts from its top CLOUDPT MK (CLOUDPT MK)
customers – and these are to be implemented in FY23-24. According to Price Close Relative to KLPRP Index (RHS)
0.60 145
management, these projects are typically two to five times bigger than its
usual contract values of MYR2-5m. According to Verint Systems, the optimal 0.55 137

timeline for a technology refresh for FIs is 3-5 years. It is also evident that 0.50 128
local banks are mostly increasing or maintaining their IT expenses over the
0.45 120
past few years (Figure 2). 83.2% of banks in the Asia-Pacific will increase
their technology budgets in 2023, with 14.8% signalling that they will raise 0.40 112

their budgets by 20% or more (according to International Data Corporation). 0.35 103
We believe the growth outlook is buoyant – especially in the FI space over the
medium term, as banks will continue to invest heavily in digitalisation and 0.30 95
May-23

May-23

Jun-23

Jun-23

Jun-23

Jun-23

Jun-23

Jun-23

Jun-23
technology.
 Growing ramping up in new cloud services segment. With Sunline (for the Source: Bloomberg
integration of banking systems) and ServiceNow (global market share of
40.1% in IT service management in 2021, and with a 28.8% market share in
IT asset management currently) as its principals, we expect its cloud services
and software applications business – a new division – to start contributing
c.5% of total FY23 revenue. Moreover, this contribution is anticipated to grow
at least double YoY up to FY25. According to management, it clinched a
ServiceNow project with an insurance company within its orderbook prior to
its listing. Recently, Cloudpoint also secured a Sunline contract with a local
investment bank, marking a positive development that highlights the growing
momentum in this segment.
 Earnings forecast and valuation. We project a 3-year earnings CAGR of
29.4% and ascribe a P/E of 19x (on par with the industry mean) to FY24F
earnings, to derive our FV of MYR0.79. Key risks: Dependence on major
customers, unexpected delays in implementation and order replenishment.

Forecasts and Valuation Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F

Total turnover (MYRm) 60 91 119 159 205
Recurring net profit (MYRm) 9 12 17 22 29
Recurring net profit growth (%) 24.4 30.0 34.5 34.3 28.6
Recurring P/E (x) 29.26 22.50 16.73 12.46 9.69
P/B (x) 17.7 13.3 4.0 3.3 2.8
P/CF (x) 84.23 31.44 8.42 14.27 10.91
Dividend Yield (%) 2.2 6.0 2.1 3.2 4.1
EV/EBITDA (x) 20.13 15.42 9.14 6.50 4.64
Note:
Return on average equity (%) 51.0 67.4 32.2 28.9 31.1 Small cap stocks are defined as companies with a market
Net debt to equity (%) net cash net cash net cash net cash net cash capitalization of less than USD0.5bn.
Source: Company data, RHB

See important disclosures at the end of this report

1
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Financial Exhibits
Asia Financial summary (MYR) Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F
Malaysia Recurring EPS 0.02 0.02 0.03 0.04 0.05
Technology DPS 0.01 0.03 0.01 0.02 0.02
Cloudpoint Technology BVPS 0.03 0.04 0.13 0.16 0.19
CLOUDPT MK Return on average equity (%) 51.0 67.4 32.2 28.9 31.1
Not Rated
Valuation metrics Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F
Valuation basis Recurring P/E (x) 29.26 22.50 16.73 12.46 9.69
19x P/E on FY24F EPS P/B (x) 17.7 13.3 4.0 3.3 2.8
FCF Yield (%) 1.2 1.8 12.8 7.9 9.8
Key drivers Dividend Yield (%) 2.2 6.0 2.1 3.2 4.1
i. Increase in orderbook size; EV/EBITDA (x) 20.13 15.42 9.14 6.50 4.64
ii. Expecting three FI’s technology refresh EV/EBIT (x) 20.77 15.82 9.53 6.80 4.85
contracts;
iii. Growing momentum in the new cloud services Income statement (MYRm) Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F
segment Total turnover 59.5 90.6 119.4 158.9 205.1
Gross profit 17.8 24.7 31.2 41.4 53.5

Key risks EBITDA 13.0 17.2 21.9 29.0 37.5

Depreciation and amortisation (0.4) (0.4) (0.9) (1.3) (1.6)
i. Dependence on major customers;
ii. Unexpected delays in implementation of Operating profit 12.6 16.7 21.0 27.7 35.8
solutions; Net interest 0.2 0.2 0.8 1.4 1.7
iii. Highly reliant on winning new orders. Pre-tax profit 12.8 16.9 19.2 29.2 37.5
Taxation (3.3) (4.6) (4.6) (7.0) (9.0)
Company Profile Reported net profit 9.4 12.3 14.6 22.2 28.5
Cloudpoint Technology provides enterprise and data Recurring net profit 9.4 12.3 16.5 22.2 28.5
centre networking solutions, cybersecurity solutions,
professional IT services as well as cloud services and
software applications. Cash flow (MYRm) Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F
Change in working capital (7.1) (16.3) 18.0 (2.7) (3.1)
Cash flow from operations 3.3 8.8 32.8 19.4 25.3
Capex 0.0 (3.7) 2.5 2.5 1.8
Cash flow from investing activities (0.4) (3.4) 2.5 2.5 1.8
Dividends paid (6.1) (16.6) (5.8) (8.9) (11.4)
Cash flow from financing activities (8.1) (8.1) 35.3 (7.4) (9.7)
Cash at beginning of period 19.3 14.3 11.7 82.3 96.7
Net change in cash (5.2) (2.7) 70.6 14.4 17.4
Ending balance cash 14.1 11.7 82.3 96.7 114.2

Balance sheet (MYRm) Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F

Total cash and equivalents 14.3 11.7 82.3 96.7 114.2
Tangible fixed assets 1.0 4.7 6.3 7.5 7.7
Total assets 46.5 66.6 169.1 204.6 246.7
Short-term debt 0.0 0.0 5.8 8.9 11.4
Total long-term debt 0.1 0.1 0.1 0.1 0.1
Total liabilities 30.8 45.8 99.2 121.3 146.3
Total equity 15.6 20.8 70.0 83.3 100.4
Total liabilities & equity 46.5 66.6 169.1 204.6 246.7

Key metrics Dec-21 Dec-22 Dec-23F Dec-24F Dec-25F

Revenue growth (%) 16.2 52.2 31.8 33.0 29.1
Recurrent EPS growth (%) 24.4 30.0 34.5 34.3 28.6
Gross margin (%) 29.9 27.3 26.1 26.1 26.1
Operating EBITDA margin (%) 21.9 19.0 18.3 18.3 18.3
Net profit margin (%) 15.9 13.6 12.2 14.0 13.9
Dividend payout ratio (%) 64.4 135.4 40.0 40.0 40.0
Capex/sales (%) 0.0 4.1 (2.1) (1.6) (0.9)
Interest cover (x) 1,262 1,046

Source: Company data, RHB

See important disclosures at the end of this report

2
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Investment Thesis
Solid track record with local FIs. It is crucial for FIs to have high-performance network
infrastructures to support their mission-critical applications. They need to ensure that their
IT operations are not disrupted, and their IT systems are protected from cyber-attacks and
threats. About 88.7% of Cloudpoint’s FY22 sales are generated from FIs that Cloudpoint
has >10 years of professional ties with. It is also evident that its top two FI customers –
Customers G and D – have been increasing their service value with Cloudpoint, recording
3-year CAGRs of 26.2% and 58.7%. The group also secured four new FI customers in FY22
– players in insurance, asset management and smaller banks with legacy IT infrastructure.
This is a testament to Cloudpoint’s quality solutions and after-sales support.
We anticipate the strong growth of its networking and cybersecurity solutions to lead to an
increased stream of recurring income and margin expansion (~50% GPM). There is a high
customer retention rate here, as 70-80% of its clients procuring solutions implementation
have opted to also subscribe to its after-sales services for 1-3 years.
Moving up the value chain for potential cross-selling. The group remains aware of the
latest customer trends and requirements, as well as its principals’ innovations and product
upgrades, and the renewal of their solutions such as the adoption of artificial intelligence
(AI) in cybersecurity. In addition, Cloudpoint started to launch and provide cloud services
and software applications including Amazon Web Services, Microsoft Azure, Alibaba Cloud,
ServiceNow and Sunline for its customers since April 2022. Its wide range of solutions
allows it to cross-sell products to customers and provide one-stop solutions that help to cut
down customers’ cost and inconvenience in dealing with multiple service providers.
A distributor for ServiceNow and Sunline. Cloudpoint has been a distributor of Sunline
and ServiceNow solutions since Feb 2022 and Jun 2022. To date, it is the only distributor
of ServiceNow products in Malaysia. It is one of three distributors for Sunline – and this
principal intends to work with Cloudpoint to service the financial services industry (FSI).
Sunline is the leading banking software and technology services company from China.
Listed in 2012 and ranked among 2017 Forbes China Top 100 Potential Enterprises,
Sunline has more than 4,000 employees worldwide and serves over 700 banking and
finance customers. As the leading financial IT service provider, it continuously reinvents
solutions by integrating the latest technology trends with industry best practices to provide
comprehensive and secure financial solutions. Cloudpoint is Sunline’s first sales and service
partner in Malaysia to target FSI players, with solutions for digital core banking, digital
financial platforms, payment and remittance, loan origination, digital FX, virtual credit cards,
risk management, business intelligence and data analytics management.
ServiceNow is a cloud-based platform that provides a single system of records for all IT
services and operations, allowing organisations to streamline and automate workflows,
improve communication and collaboration, and enhance overall service delivery. Cloudpoint
is an official ServiceNow sales and service partner with the expertise to provide consulting
and implementation services on IT service management (ITSM), IT operations
management, IT asset management, field service management, customer service
management, security operations and business process automation solutions. ServiceNow
expects its subscription revenues to reach USD8.44-8.5bn, representing 22.5-23.5% YoY
growth. Recently, ServiceNow has also announced its partnership with Nvidia to develop
enterprise-grade generative AI capabilities that can transform business processes with
faster, more intelligent workflow automation. According to Apps Run The World, ServiceNow
led the pack with a 40.1% market share, riding on a 23.6% jump in ITSM license,
maintenance and subscription revenues in 2021 (Figure 1).
Its ability to secure such established principals is also a testament of Cloudpoint’s solid track
record among Malaysia FIs. Both partnerships are strategic – FIs in Malaysia are adopting
digitalisation and prefer transitioning capex to operating expenses in order to save more on
capex. According to the management, there is a ServiceNow project with an insurance
company within its MYR1.3m orderbook from the cloud and software segment. The group
is optimistic of the partnership and expects more projects secured for both Sunline and
ServiceNow, which command a GPM of c.50%. Hence, we expect its new business
segment, cloud services and software applications business to start contributing c.5% of
total FY23 revenue, and to grow by at least double YoY to FY25.

See important disclosures at the end of this report

3
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Figure 1: 2021 ITSM applications – market shares

Source: Apps Run The World

Growing demand for networking and cybersecurity solutions. Data digitalisation, a

remote working environment, the growing number of businesses, government initiatives,
increased sophistication in threats and regulatory compliance are boosting the adoption of
more networking and cybersecurity solutions. The total networking solutions industry and
total cybersecurity solutions industry in Malaysia is forecasted to grow at CAGRs of 18.9%
and 16.1% over 2023-2025. Meanwhile, the cloud solutions industry in Malaysia is expected
to grow at a CAGR of 24.7% from 2022 to 2026. As Cloudpoint’s market shares in
networking, cybersecurity and cloud solutions are still relatively small, we expect it to capture
larger market share going forward, due to its solid track record.
Growing orderbook. According to its prospectus, Cloudpoint’s orderbook target for FY23
was c.MYR39m. We understand that this has surged by over 50%, to bring its total FY23F
orderbook to c.MYR60m – a result of strong order replenishments from its top five customers
over the last two months. We expect the strong orderbook growth to continue, as it is looking
to secure more projects from new and existing customers across all segments from its
robust tenderbook. Post-listing, Cloudpoint secured a contract with a local investment bank
under this new cloud and software application segment.
Expecting three technology refresh contracts. Cloudpoint is expecting three major
technology refresh contracts from its top customers for both networking and cybersecurity
solutions. One is expected to be implemented in FY23, and the other two in FY24. According
to management, these projects are typically 2-5x bigger than its usual contract values of
MYR2-5m – as the former spans both production and disaster recovery sites as well as
involves multiple replacements for equipment.
According to Verint Systems, the optimal timeline for a technology refresh for FIs is 3-5
years. It is also evident that local banks are mostly increasing or maintaining their IT
expenses over the past few years. 83.2% of banks in the Asia-Pacific will increase their
technology budgets in 2023, with 14.8% signalling that they will raise their budgets by 20%
or more (according to International Data Corporation).
Technology refresh is the cycle of regularly updating key elements of the IT infrastructure
to maximise system performance. Instead of using systems until they can no longer function,
many companies choose to upgrade or replace certain infrastructure on a regular schedule.
According to our ground checks, FIs in Malaysia will budget for technology refresh in stages
every year due to the end-of-life factor, increased performance needs, and innovations in
data centre networking infrastructure.
Cloudpoint will benefit from the demand for technology refresh every year and growing FIs’
technology budgets. Management is also working doubly hard to tender for more networking
and cybersecurity projects – with a keen eye on more technology refresh projects in the
future. With its replenishment orders and orders in hard, we expect its networking business
to grow 20% and 27% in FY23F and FY24F, while its cybersecurity business is estimated
to grow by 30% and 27% in FY23F and FY24F – all on a YoY basis.

See important disclosures at the end of this report

4
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Figure 2: Malaysia banks’ IT expenses budgets

1000
900
800
700
600
500
400
300
200
100
0
FY18 FY19 FY20 FY21 FY22

MAYBANK RHBBANK HONG LEONG PUBLIC BANK

Note: Data derived from annual reports

Source: Company data

Financial Overview And Valuation

Financial overview. In the past four financial years, Cloudpoint registered a 3-year revenue
CAGR of 25.3%, mainly attributable to fast growth in both its networking and cybersecurity
solutions businesses. Following this, it achieved a 3-year earnings CAGR of 25.9%, thanks
to a better product mix arising from its networking solutions segment chalking its highest
growth.
1Q23 revenue of MYR19.40m (+89% YoY) was driven by higher contributions from both
project-based and recurring income. Notably, the group reported a substantial surge in net
profit of 223% YoY to MYR3.01m, for the same quarter. It also generated a healthy cash
inflow from operating activities amounting to MYR2.57m, underpinned by a robust business
model and its strategic focus on serving the financial services industry. The first quarter is
typically the most subdued one, and its strong performance in 1Q23 sets a positive tone for
growth in the subsequent quarters of the year.
Forecasts. Note that Cloudpoint’s earnings are subject to seasonal factors and two-thirds
of annual earnings are typically reflected in 2H. This is because FIs tend to utilise the
majority of their IT budgets towards the year-end. As such, we expect earnings to propel
higher in the subsequent quarters.
With its strong working relationship with Malaysia FIs and solid track record, we forecast a
3-year earnings CAGR of 29.4%, as the group continues to attract its talent pool in security
operations and network operations, while penetrating into an untapped market – cloud
solutions. Any technology refresh projects should benefit Cloudpoint’s networking solutions
segment while the increased level of threat sophistication and regulatory compliance bodes
well for its cybersecurity solutions segment. As Cloudpoint only has a c.30% market share
in Malaysia FIs’ networking and cybersecurity solutions, we believe it can grow this by
venturing into areas like East Malaysia, while cross-selling new solutions like cloud services.
Cloudpoint is also benefiting from the bigger pie as the networking solutions and
cybersecurity solutions industries in Malaysia have 2023-2025F CAGRs of 18.9% and
16.1%. Meanwhile, the cloud solution industry in Malaysia is expected to grow by a CAGR
of 24.7% from 2022 to 2026 (data from Providence Strategic Partners).
Dividends and balance sheet. While the group does not have any dividend policy, we are
assuming a dividend payout ratio of 40% of PAT, which translates to dividend yields of 2.1%
and 3.2% for FY23F and FY24F. Cloudpoint has a healthy balance sheet, as it has no
borrowings and net cash per share of 8.2 sen post-IPO.
Valuation. With its healthy balance sheet and expected high earnings growth, we are
ascribing 19x P/E on FY24F earnings, to arrive at a FV of MYR0.79. The valuation is on par
with the 2-year consensus forward P/E of the local IT players who have large exposure to
FIs – these players include LGMS and Infomina.

See important disclosures at the end of this report

5
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Figure 3: Peer comparison – local IT players

Price
Div. Yld EV/
P/E (x) ROE (%) NP Growth (%)
Mkt Cap (%) EBITDA
Company Country FYE 11-May-23 PEG
(USDm)
Actual 1 Yr Fwd 2 Yr Fwd 1 Yr Fwd 1 Yr Fwd 1 Yr Fwd 1 Yr Fwd 2 Yr Fwd
(Local Currency)

Local Peers
Censof MA 03/2023 25.8 0.22 18.0 NA NA NA NA NA NA NA NA
Dataprep MA 12/2023 26.2 0.18 -6.7 NA NA NA NA NA NA NA NA
Datasonic Group MA 03/2023 267.7 0.44 15.6 13.1 13.1 4.0 21.7 9.6 18.7 0.2 81.0
Excel Force MSC MA 06/2023 49.2 0.41 16.8 NA NA NA NA NA NA NA NA
Heitech Padu MA 12/2023 14.7 0.67 -6.6 NA NA NA NA NA NA NA NA
Iris Corp MA 03/2023 70.9 0.10 14.4 NA NA NA NA NA NA NA NA
Mesiniaga MA 12/2023 16.4 1.25 11.1 NA NA NA NA NA NA NA NA
MyEG Services MA 12/2023 1271.0 0.79 14.0 15.2 13.5 2.1 21.7 14.0 -7.9 12.4 1.1
N2N Connect MA 12/2023 55.2 0.46 13.8 26.9 20.9 3.3 21.6 3.8 -48.8 28.4 0.7
Omesti MA 03/2023 37.6 0.32 1.3 NA NA NA NA NA NA NA NA
Infoline Tech Group MA 12/2023 57.2 0.73 20.7 NA NA NA NA NA NA NA NA
Kronologi Asia MA 01/2024 85.2 0.53 15.0 16.3 13.5 NA 22.7 NA -7.9 20.9 0.6
Microlink Solutions MA 03/2023 208.5 0.90 35.2 NA NA NA NA NA NA NA NA
Infomina MA 05/2023 194.6 1.49 48.0 25.5 20.1 0.9 22.7 19.6 41.9 27.2 1.0
LGMS MA 12/2023 101.0 1.02 38.5 32.8 19.2 NA 21.7 19.4 17.4 70.4 0.3

Mkt. Cap Weighted Avg. 726.6 19.4 17.2 14.6 2.3 21.9 14.0 0.8 16.0 11.8
Simple Avg. 165.4 16.6 19.4 16.7 2.6 22.0 13.3 2.2 26.6 14.1
Source: Bloomberg, RHB

Figure 4: Peer comparison – Local IT players with high exposure in FI

Price
Div. Yld EV/
P/E (x) ROE (%) NP Growth (%)
Mkt Cap (%) EBITDA
Company Country FYE 11-May-23 PEG
(USDm)
Actual 1 Yr Fwd 2 Yr Fwd 1 Yr Fwd 1 Yr Fwd 1 Yr Fwd 1 Yr Fwd 2 Yr Fwd
(Local Currency)

Local Peers
INFOMINA MA 05/2023 194.6 1.49 48.0 25.5 20.1 0.9 22.7 19.6 41.9 27.2 1.0
LGMS MA 12/2023 101.0 1.02 38.5 32.8 19.2 NA 21.7 19.4 17.4 70.4 0.3

Mkt. Cap Weighted Avg. 162.6 44.7 28.0 19.8 0.6 22.4 19.3 33.5 42.0 0.7
Simple Avg. 147.8 43.2 29.1 19.6 1.0 22.2 19.4 29.6 48.8 0.6
Source: Bloomberg, RHB

See important disclosures at the end of this report

6
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Company Overview
Cloudpoint is an IT solutions provider based in Malaysia. The group usually provides
services in designing and tailoring solutions based on its customers’ IT environment and
business needs. It also offers project management, installation and system integration
services, as well as professional IT maintenance and network monitoring services. The
products and services offered are mainly enterprise and data centre networking solutions,
cybersecurity solutions, professional IT services as well as cloud services and software
applications.
The group business segments are based on the following models:
i. One-off project-based income model (88.3% of FY22 revenue). This includes sales
of hardware, software license subscription fees, implementation service fees (which
are one-off fees charged for the design and implementation works of the projects) and
one-off project-based fees for cloud consultancy services and the use of cloud-based
infrastructure and software licences, as well as a service fee for configuration and IT
workloads migration. The group is engaged by its customers for:
 Enterprise and data centre networking solutions (39.4% of FY22 revenue). It
provides solutions that are used in enterprises’ offices and data centres to enable
data transmission and connectivity.
 Cybersecurity Solutions (48.9% of FY22 revenue). It provides solutions on
preventing cyber threats and attacks to IT infrastructure.
ii. Recurring income model (11.7% of FY22 revenue). It typically comprises annual
contract fees and service fees, with tenures of 1-3 years. The group charges customers
an annual contract fee when it is contractually engaged to provide professional IT
services, and a service fee for the provision of professional IT services on a periodic
basis (monthly or quarterly). The group also earns recurring income from cloud
services and software applications, as it charges a cloud management service fee and
software licence subscription fees depending on the type of cloud-based infrastructure
and software sourced from the relevant technology vendors.

Figure 5: Business model

Source: Company data, RHB

See important disclosures at the end of this report

7
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Figure 6: Business processes

Source: Company data, RHB

Figure 7: Cloudpoint’s technology vendors

Enterprise Solutions

Cybersecurity Solutions

Cloud services & software applications

Source: Company data, RHB

Cloudpoint is led by an experienced management team. Executive Director and CEO

Choong Wai Hoong is responsible for the overall strategy and corporate direction of the
group. Soo Kit Teng, Executive Director and the group’s financial controller has over 20
years of experience in finance and accounting-related fields. Soo oversees Cloudpoint’s
finance, human resources and administrative-related matters. They are supported by the
rest of the senior management team, which is experienced in various fields.

See important disclosures at the end of this report

8
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Figure 8: Group structure post IPO

Source: Company data, RHB

Future Plans And Strategies

Establishment of new security operations centre (SOC). The group intends to venture
into providing managed cybersecurity services by setting up a SOC. A SOC facilitates the
monitoring and management of cyber threats and attacks impacting an enterprise’s network
infrastructure. Managed cybersecurity services prevent customers from incurring
substantial operational expenses in setting up their own dedicated IT team to monitor cyber
threats and attacks. With the abovementioned plans, the group aims to benefit from the
potential growth in demand for managed cybersecurity services.
Enhancement of existing network operations centre (NOC). The group intends to
enhance its NOC to enable the offering of additional managed network services. With this,
it will not only be able to cater for more customers but also carry out more services to
enhance its competitiveness in securing managed network services projects. This will allow
it to increase its revenue stream, with the subscription fees earned for the managed network
services offered.
Establishment of new public cloud infrastructure. The group intends to expand its cloud
services and software applications segment. According to the IMR Report, cloud solutions
have been gaining traction. Cloudpoint has gained knowledge and understanding of network
infrastructure by implementing enterprise and data centre networking solutions that enable
it to gain in-depth understanding of customers’ needs in network infrastructure. It also
intends to leverage on this knowledge to provide cloud services and software applications.
By doing so, the group is able to tap on the growing market trend for cloud solutions. It also
aims to grow this segment by collaborating with new and existing technology vendors to
offer a wider range of cloud services and software applications – which also helps to boost
cross-selling.

See important disclosures at the end of this report

9
Market Dateline / PP 19489/05/2019 (035080)
Cloudpoint Technology Malaysia Trading Idea
20 June 2023 Technology | Hardware & Equipment

Key Risks
Dependent on customers involved in financial services. The group provides services to
end-users that largely consist of enterprises in the financial services, insurance and
telecommunications industries, as well as other technology service providers. Hence, it may
be adversely impacted if there is a slowdown in the financial services industry. Any material
changes in regional and global economic conditions may impact the financial sector – which
would impact Cloudpoint’s business, financial conditions and operational numbers.
Unexpected delays or interruptions. The design and implementation of IT solutions,
including enterprise and data centre networking solutions, cybersecurity solutions as well
as cloud services and software applications are subject to unexpected delays or
interruptions caused by factors beyond its control. Any delays in the progress of its projects
would affect the timing of its delivery – and slow down revenue recognition.
High reliance on new project and orders. Due to the nature of its business, Cloudpoint’s
future profitability and financial performance depend on its ability to secure new projects
and customers. The absence of long-term contracts of more than three years poses a risk
of losing customers – since they would not be obliged to continue using its solutions and
services. Losing any customers – particularly major ones – and being unable to secure sales
from new customers or additional sales from existing ones in a timely manner will adversely
affect the group’s business and financial performance.
Loss of executive directors and key senior management. Cloudpoint’s continued
success is heavily dependent upon the services of its executive directors and key senior
management who have extensive knowledge and experience in the business and industry.
As such, the loss of any without suitable or timely replacements may result in an adverse
effect on operations and hamper the group’s ability to maintain and/or improve its
performance.
Figure 9: Utilisation of IPO proceeds
Estimated timeframe MYRm % of proceeds
Business expansion Within 36 months 13.3 32.9
Relocation of new offices Within 48 months 7.8 19.3
Working capital requirements Within 24 months 15.802 39.1
Estimated listing expenses Within 2 months 3.5 8.7
Total 40.402 100.0
Source: Company data, RHB

See important disclosures at the end of this report

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