SNS Network Technology Berhad reports decline in key metrics, raising red flags for investors

SNS Network Technology Berhad (KLSE:SNS) reported its full-year 2024 financial results, showing a decline in key metrics compared to the previous year. The company’s revenue decreased by 9.1% to RM1.28b, while net income dropped by 27% to RM32.0m. The profit margin decreased to 2.5% from 3.1% in FY 2023, driven by lower revenue. Earnings per share (EPS) also decreased from RM0.05 to RM0.02.

The primary driver behind the revenue for the last 12 months was the Sale of ICT Products segment, contributing RM1.26b (99% of total revenue). However, the cost of sales amounted to RM1.18b, accounting for 92% of total revenue. The largest operating expense was Sales & Marketing costs, totaling RM33.8m (53% of total expenses), which impacted earnings negatively and should be a concern for investors as this could result in future losses if not managed properly.

In terms of stock performance, SNS Network Technology Berhad shares are up 1.9% from a week ago, but it is important to note that there are warning signs in our investment analysis for the company that may pose risks for investors.

Our analysis shows that there are two key concerns: firstly, the decline in key financial metrics such as revenue and net income could indicate an underlying issue with the company’s business model or strategy; and secondly, the high cost of sales and large operating expenses could put pressure on profit margins and earnings per share.

Overall, our analysis suggests that investors should exercise caution when considering investing in SNS Network Technology Berhad and carefully consider these concerns before making any investment decisions.

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