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Kenanga
Scicom: An Undervalued BPO Play
Fair value: RM1.70 (+58% upside)
Last Price: RM1.13
Div yield: 7.9%
Scicom generates c.70% of its revenue from its business process outsourcing (BPO) segment which is expected to grow with the intrinsic shift of higher outsourcing demand from businesses looking to improve efficiency and scalability. The group is also poised to benefit from the impending recovery of China students flowing into Malaysia via its Education Malaysia Global Services (EMGS) platform. With a current forward PER of 10x, the share price offers an excellent opportunity to capitalise on Scicom’s expanding established operations while receiving annual 7.9% dividend yield, pending potential catalysts from artificial intelligence (AI) adoption and its proprietary medical tech (MedTech) which is not yet priced in. Furthermore, a potential FV of RM1.70 represents an upside of 58%.