Securemetric Berhad: A Turnaround Opportunity in Cybersecurity Amid Strong Earnings Growth and Undervaluation

In the rapidly evolving digital economy, companies that align with structural shifts in technology and consumer behavior often emerge as asymmetric opportunities for long-term investors. Securemetric Berhad (KLSE:SMETRIC), a Malaysian cybersecurity solutions provider, has demonstrated a compelling turnaround in recent quarters, marked by robust revenue growth, improving profitability, and a valuation that appears to understate its intrinsic value. For investors seeking exposure to a sector poised for expansion, the question is whether Securemetric's financial and strategic progress justifies its current price and signals a sustainable path forward.

Financial Turnaround: Revenue and Earnings Growth Outpace Industry Averages

Securemetric's first-quarter 2025 earnings report underscored a significant improvement in its financial performance. Revenue reached RM63 million, reflecting an average annual growth rate of 19% in 2025, while earnings per share (EPS) rose to RM0.001 from RM0.00 in the same period in 2024. More strikingly, the company's earnings growth has averaged 54.9% annually over the past several years, surging to 632.3% in the most recent year—a figure that far exceeds the Software industry's 23.7% growth rate.

This acceleration in profitability is further evidenced by a jump in net profit margins from 1.5% to 8.6% and a Return on Equity (ROE) of 12.2%. Such metrics suggest that Securemetric is not merely growing revenue but also converting that growth into meaningful profits, a critical indicator of operational efficiency and competitive differentiation.

Historical data reveals that a simple buy-and-hold strategy around Securemetric's earnings dates has historically shown a strong likelihood of positive returns. Over the 3-day period following earnings releases from 2022 to now, the win rate was 66.67%, rising to 55.56% over 10 days and 50.00% over 30 days. These figures indicate that the company's earnings momentum has not only driven fundamental improvements but has also translated into favorable price action for investors who acted promptly. The maximum observed return of 0.31% over 4 days further underscores the potential for short-term gains aligned with earnings events.

Valuation Metrics: A Discounted Price Amid Strong Fundamentals

Despite these improvements, Securemetric's valuation remains compelling. A Discounted Cash Flow (DCF) analysis estimates its fair value at MYR 0.23 per share, compared to its current price of MYR 0.16—implying a 45.82% upside potential. This undervaluation is further supported by relative metrics: its trailing Price-to-Earnings (PE) ratio of 17.15 is significantly below the Software industry average of 31.2x and the peer average of 26.9x.

The company's Price-to-Sales (PS) ratio of 1.47 and Price-to-Book (PB) ratio of 2.09 also suggest a conservative multiple for a firm with such strong growth dynamics. Notably, Securemetric's market capitalization of MYR 92.33 million appears modest given its 122% revenue growth over three years and its leadership in mission-critical digital security solutions.

Strategic Initiatives: Innovation and Regional Expansion as Growth Drivers

Securemetric's financial turnaround is underpinned by a strategic focus on innovation and market expansion. The company has positioned itself at the forefront of passwordless authentication, collaborating with the FIDO Alliance to advocate for Malaysia's adoption of secure, password-free solutions. This initiative aligns with global trends toward Zero Trust architecture and addresses a critical pain point for enterprises in an era of rising cyber threats.

Additionally, Securemetric has expanded its cloud-based offerings through CENTAGATECLOUD, enabling scalable, on-demand security solutions that cater to a broader customer base. Its recent integration with Singapore's Sign with SingPass system and its role in Malaysia's MyDigital ID rollout highlight its ability to leverage government-backed digital transformation projects—a source of stable, long-term revenue.

The company's regional footprint has also grown, with operations in Indonesia, Vietnam, and the Philippines. This diversification reduces reliance on any single market and positions Securemetric to capitalize on Southeast Asia's digitalization wave.

Risk and Reward Dynamics

While Securemetric's fundamentals are strong, investors must weigh potential risks. The cybersecurity sector is inherently cyclical, with demand tied to macroeconomic conditions and the frequency of cyber threats. Additionally, the company's free cash flow of MYR 1.23 million and operating cash flow of MYR 2.37 million, though positive, suggest room for improvement in liquidity. A debt-to-equity ratio of 0.06 indicates a conservative capital structure, but the absence of a dividend and lack of analyst coverage may limit short-term investor appeal.

However, Securemetric's strong Altman Z-Score of 4.49 and Piotroski F-Score of 5 signal robust financial health and governance. Its alignment with global standards (e.g., FIDO Alliance) and recognition as a Zimperium APJ VAR Partner further reinforce its credibility. For long-term investors, these factors suggest a resilient business model capable of sustaining growth even amid volatility.

Investment Thesis: A Compelling Turnaround in a High-Growth Sector

Securemetric Berhad presents a rare combination of undervaluation and growth potential. Its earnings and revenue momentum, coupled with a valuation that lags behind its intrinsic value, creates an asymmetric opportunity: the upside from continued market share gains and margin expansion outweighs the downside of macroeconomic headwinds.

For investors with a multi-year horizon, the company's strategic initiatives in passwordless authentication, cloud-based security, and regional expansion provide a durable foundation for growth. The historical performance around earnings releases—where a 66.67% win rate over 3 days and a 50.00% win rate over 30 days suggest consistent price action—further supports the case for a buy-and-hold strategy. While risks exist, Securemetric's alignment with structural trends in digital transformation and its strong balance sheet make it a compelling candidate for a long-term portfolio.

In conclusion, Securemetric Berhad's improving returns on capital, innovative product suite, and undervaluation position it as a standout opportunity in the cybersecurity sector. As the digital economy accelerates, companies that can bridge the gap between security and convenience—like Securemetric—are likely to outperform. For those willing to look beyond short-term volatility, this turnaround story offers a compelling case for investment.