Comprehensive Analysis of Sky ICT and Peer Companies in 2024

Date: December 11, 2024

Broker: Maybank Securities (Thailand) PCL

Introduction

In the rapidly evolving landscape of technology services, several companies have emerged as key players, each carving out a niche with unique offerings and growth trajectories. This comprehensive analysis delves into the performance, potential, and strategic outlook of Sky ICT, alongside peer companies in the tech-service sector.

Sky ICT: A Prime Beneficiary of Tourism and Government Spending

Sky ICT (SKY TB) is positioned as a top pick among technology service companies due to its strategic focus on capitalizing on the growing passenger flows at Thailand’s airports and increased government IT spending. The company is forecasted to achieve a core profit growth of 61% in FY24 and 56% in FY25, driven by its robust system integration (SI) business and airport-related services.

Growth Drivers

Sky ICT’s growth is expected to stem from several key areas:

• Passenger Processing Services: With a significant portion of revenue derived from CUPPS (Common Use Passenger Processing System) and APPS (Advance Passenger Processing System), the company anticipates a revenue growth driven by increased passenger volumes.
• System Integration: A projected 213% increase in SI revenue in FY25 is anticipated, supported by delayed government projects and new opportunities in biometric scanning at airports.
• Cloud Services: Potential upsides include cloud adoption by government agencies, which could bolster revenues in FY25 and FY26.

Financial Metrics

Sky ICT is trading at a PEG ratio of 0.8x, which is lower than its peers’ average, indicating potential undervaluation given its growth prospects. The company’s revenue in FY23 was THB4.1 billion, with significant contributions from passenger processing services. The forecasted revenue for FY24 and FY25 is THB6.584 billion and THB10.853 billion, respectively, reflecting substantial growth.

SWOT Analysis

Sky ICT’s key strengths include a high proportion of recurring revenue and its strategic advantage from Thailand’s tourism growth. However, the company faces risks such as heavy reliance on government projects and potential political instability.

Bluebik Group

Bluebik Group (BBIK TB) is another notable player in the tech-service sector, recommended as a buy with a target price of THB50.10. The company is expected to leverage its strategic initiatives to achieve a core EPS CAGR of 28.4% from FY24 to FY26.

Investment Outlook

Bluebik is poised for growth, with its P/E ratios at 29.2x for FY24 and 22.5x for FY25. The company’s strong ROE and modest dividend yield further enhance its investment appeal.

Beryl 8 Plus

Beryl 8 Plus (BE8 TB) is recommended as a buy with a target price of THB20.50. The company stands out with its impressive core EPS CAGR of 45.7% for FY24-26, making it a compelling option for growth-focused investors.

Performance Metrics

Beryl 8 Plus boasts a lower PEG ratio of 0.5, indicating strong growth potential relative to its valuation. The company’s strategic focus on enhancing ROE and exploring new market opportunities positions it well for sustained growth.

Humanica

Humanica (HUMAN TB), recommended as a buy with a target price of THB12.60, is expected to maintain steady growth in the tech-service arena. The company’s core EPS CAGR of 13.7% highlights its stable growth trajectory.

Financial Health

With P/E ratios of 24.7x for FY24 and 21.6x for FY25, Humanica offers a balanced investment profile, supported by a robust dividend yield and consistent ROE performance.

Netbay

Netbay (NETBAY TB) is another key player, with a buy recommendation and a target price of THB20.50. Despite its negative core EPS CAGR of 3.6%, the company’s strong recurring revenue base supports its valuation.

Market Position

Netbay’s strategic focus on enhancing its service offerings and expanding its market reach positions it as a resilient player in the tech-service sector, despite current growth challenges.

Conclusion

The tech-service sector presents a diverse array of investment opportunities, with companies like Sky ICT, Bluebik Group, Beryl 8 Plus, Humanica, and Netbay each offering distinct strengths and growth prospects. Investors are encouraged to consider these insights and recommendations in their investment strategies, keeping an eye on market dynamics and potential risks.