KUALA LUMPUR (July 27): SNS Network Technology Bhd, which is tentatively scheduled to debut on the Ace Market on Sept 2, expects to raise up to RM90.7 million from its initial public offering (IPO) to support its business expansion.

In a statement on Wednesday (July 27), the information and communications technology (ICT) system and solutions provider said it will be issuing 362.9 million new shares in the company, representing 22.5% of the enlarged share capital.

Of the new shares, 80.6 million will be offered to the Malaysian public via balloting, while 48.4 million will be offered to its eligible directors, employees and persons who have contributed to the success of the group.

Meanwhile, 201.6 million new shares are reserved for private placement to Bumiputera investors approved by the Ministry of International Trade and Industry, with the balance of 32.3 million new shares to be placed out to selected investors.

In addition, SNS Network’s existing shareholders will also offer 48.4 million existing shares for private placement.

At an issue price of 25 sen apiece and based on its enlarged share capital of 1.61 billion shares, SNS Network is expected to have a market capitalisation of RM403.2 million.

SNS Network said it plans to use RM33.4 million of the proceeds raised from the exercise for capital expenditure, of which RM30.9 million will be allocated towards growing its device-as-a-service (DaaS) subscription-based service while RM2.5 million will be used to open 10 new retail stores in the Klang Valley, Johor and Penang.

“A further RM18 million of the proceeds will be used to part finance the construction of the company’s new regional hub in Petaling Jaya to support its nationwide expansion,” said the company, adding that the rest of the funds raised will be used for repayment of bank borrowings of RM20 million, working capital (RM13.1 million), marketing of its JOI smart classroom framework (RM1.5 million) and defraying listing expenses (RM4.7 million).

According to SNS Network’s managing director Ko Yun Hung, the company believes there is big potential in Malaysia’s DaaS market as more businesses introduce remote or hybrid work.

Since 2020 and up to June 30 this year, SNS has entered into 82 DaaS subscriptions with a total subscription value of RM255.86 million and received 75 enquiries from governmental bodies and public listed companies.

“From the above-mentioned enquiries, we have entered into contracts with 26 governmental bodies amounting to RM247.49 million and three public listed companies amounting to RM550,000,” he said.

“Based on enquires from potential customers, SNS will purchase ICT products such as desktops, laptops, interactive smartboards, workstations, digital signages, printers and servers to support the expansion of the service,” he added.

"The regional hub, which is expected to be operational by 2026, will include experience centres for SNS to showcase new and innovative ICT solutions on Internet of Things such as smart homes, smart retail, smart education, smart signages and smart shelving.

“It will also have storage facilities, live video areas, training centres, workshops and office facilities,” added Ko.

For the financial year ended Jan 31, 2022 (FY22), profit after tax (PAT) rose to RM35.92 million from RM23.81 million a year ago. Notably, its PAT in FY21 tripled from RM7.78 million in FY20. In FY19, its PAT stood at RM9.1 million.

Meanwhile, its revenue stood at RM594.14 million in FY19, RM675.28 million in FY20, RM721.47 million in FY21 and RM1.11 billion in FY22.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.