A Look at $VSTECS / 5162 (VSTECS BERHAD) Business Endeavors

• Leading distribution hub for Information and Communication Technology (ICT) products in Malaysia

• Distributes a comprehensive range of ICT products comprising notebooks, personal computers (PC), smartphones, tablets, printers, software, network and communication infrastructure, servers, and enterprise software from more than 40 brand principals to consumers and enterprises.

• Associate company of VSTECS Holdings Limited Singapore (a wholly-owned subsidiary of VSTECS Holdings Limited Hong Kong)
• Head office and warehouse facilities are situated in Kota Damansara, Petaling Jaya
• Sales offices located in Pulau Pinang, Kuantan, Johor Bahru, Kuching, and Kota Kinabalu
• Broad customer base ranging from individuals, small and medium enterprises to large corporations and government entities.
• The company channel coverage of more than 4,600 resellers nationwide comprises mainly IT retailers, Enterprise System Integrators (SI) resellers and corporate dealers.
• Maintain distributorship agreements with more than 40 brand principals like Hewlett Packard, Asus, Lenovo, Apple, Dell, Microsoft, Cisco, Samsung, VMware, Huawei and IBM.
• Provides IT services in the form of pre-sales, integration, and post-sales in support of the brand that the company represent.

• Hold a 40% equity interest in an IT services and software development company, ISATEC Sdn. Bhd. (ISATEC).
• The investment in ISATEC is part of the company strategic expansion into the IT Software and Service segments.
• As in 2022, ISATEC, contributed RM3.0 million to the company profitability.


• Key activities:
o the marketing , sales, and channel management of the brands.
o warehouse facilities and channel logistics to cover nationwide sales.
o related services in terms of pre-sales system solutions and post-sales and warranty support.

3 business segments:
1. ICT distribution: Distribution of Volume ICT products to resellers, comprising mainly of retailers
2. Enterprise Systems: Distribution of Enterprise ICT products to resellers, comprising mainly of system integrators and corporate dealers
3. ICT services: Provisioning of ICT systems and services.

1. ICT distribution:
• Built presence in major local e-commerce platforms to fulfil the online B2B and B2C coverage on behalf of the brand principals and capitalise on the accelerated shift in demand towards online shopping.
• As of the end of 2022, VSTECS operated 18 official online brand stores across two major e-Commerce Marketplace platforms and one specific online store directly with brand principal.
• The product range also include Internet-of-Things (IoT) home appliances such as TVs, air purifiers, robot cleaners, among others.
• Demand for smarter devices, not just smartphones but an array of smart home devices connecting everything at home, from door locks to kitchen appliances and from wearables to gaming gadgets, will gain increased popularity in the coming years
• Area to venture: Metaverse could radically change content creation and is touted as the next-generation internet powered by virtual reality.
• Metaverse slated to help creators make more interactive and immersive content than ever before, with the help of new tools for consumers to experience this alternate reality.


2. Enterprise Systems:
• Top drivers for the Enterprise Systems segment: Cybersecurity, cloud ecosystems, and other storage infrastructure
• Rise in cyber-attacks and data breaches make business more conscious of cyber threats, hence increase their investment in cybersecurity to protect their digital assets.
• Organisations also increasing their IT budgets to fund business-driven priorities and replace legacy systems.
• Organisations moving their data and applications to the cloud to improve efficiency and reduce costs.
• VSTECS provide enterprise customers with cloud life-cycle services and full-region and full-cycle product systems, including cloud consulting, cloud migration, cloud operation and maintenance, cloud security, and cloud optimisation.
• Gartner, Inc. forecast, by 2025, enterprises will spend more on public cloud services than traditional IT solutions.
• Local telecommunication (Telco) sector also one of the key to Enterprise Systems segment business.
• According to Digital Nasional Berhad, Malaysia’s 5G network target of achieving at least 80% coverage by the end of 2024.
• Telco service providers have commenced their 5G initiatives with hardware acquisition projects and are in the midst of enhancing their data centre and backhaul capacity.

3. ICT services:
• Momentum from the Enterprise Systems segment will also spur the ICT Services segment which mostly comprises of project implementation for enterprise clients.
• Mainly comprise of cloud services.
• Digital technologies such as big data, cloud computing, cybersecurity, and artificial intelligence will lead the demand and growth for the Enterprise Systems and ICT Services segments.



Source: Annual Report VSTECS Berhad 2022.
AR FY23 has not been released yet in Bursa. Based on previous years pattern, the AR will probably be released in mid-April. I may do updates when the AR is released.