Rakuten Trade has affirmed its ‘buy’ rating for SNS Network Technology Bhd (KL) at 84 sen, raising the target price to RM1.23 from 54 sen. This upgrade reflects a revised valuation based on a price-earnings ratio of 25 times for the financial year ending January 31, 2026 (FY2026). The research house is optimistic about SNS’s prospects, particularly in light of the company’s involvement in the burgeoning artificial intelligence (AI) server market.
In an investment idea note issued on Wednesday, Rakuten Trade emphasized that SNS Network Technology is well-positioned to capitalize on the AI server boom. The company recently secured a significant order valued at RM85.5 million for AI super servers from a leading e-commerce platform operating in Southeast Asia and Taiwan. This order highlights SNS’s growing reputation and capability in delivering high-performance AI servers.
The AI super servers are slated for delivery to a data center in Johor Bahru in August of this year. Rakuten Trade noted that this delivery not only demonstrates SNS’s technical prowess but also lays a strong foundation for future growth opportunities in the AI server market. The successful execution of this order could open doors for additional contracts and collaborations.
Rakuten Trade also highlighted SNS’s strategic partnership with the Healthcare Information Management Systems Society (HIMSS). As HIMSS’ first digital health technology partner in Malaysia, SNS is tasked with deploying HIMSS-developed tools such as the Electronic Medical Record Adoption Model. This partnership aims to standardize medical records across hospitals, underscoring SNS’s expanding footprint in the digital health sector.
Rakuten Trade anticipates that SNS will meet its target of delivering 300 units of AI super servers in FY2025, with potential to double this figure in the subsequent year. This optimistic forecast is based on SNS’s current momentum and market demand for high-performance servers. The research house has accordingly upgraded its earnings projection for FY2026 by 3% and for FY2027 by 1%.
The research house believes that SNS Network Technology’s future remains bright, driven by new AI server sales and sustained growth in its existing information and communications technology (ICT) business. The company is expected to benefit from ongoing digital transformation trends within the education and commerce sectors, as well as the regular refresh cycles for consumer devices.
| Financial Year | Previous Earnings Projection | Revised Earnings Projection | Increase |
|---|---|---|---|
| FY2025 | N/A | 300 units of AI servers | N/A |
| FY2026 | Previous estimate | +3% | +3% |
| FY2027 | Previous estimate | +1% | +1% |
Rakuten Trade’s note provides further insights into SNS’s potential and strategy. Below are some additional key points:
- AI Server Market Expansion: SNS’s recent success in securing a large AI server order is expected to set a precedent for future deals, enhancing the company’s reputation in the market.
- Healthcare Sector Involvement: The partnership with HIMSS marks a significant step for SNS in the healthcare sector, potentially leading to more opportunities in digital health solutions.
- Financial Growth: The revised earnings projections indicate confidence in SNS’s ability to leverage its current projects and partnerships to drive financial growth.
Rakuten Trade’s continued ‘buy’ rating and increased target price for SNS Network Technology reflect the research house’s confidence in the company’s strategic direction and market potential. With substantial orders, strategic partnerships, and a favorable market outlook, SNS is well-positioned for continued growth and success in the coming years.
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