This marks his second price target increase in two months after he raised it from 21.5 cents in March.
For its 1QFY2026, TeleChoice reported profit before tax of $2.3 million, an increase of 78% y-o-y, driven mainly by a big jump in its business of managing logistics of mobile devices on behalf of its key customer in Malaysia, U-Mobile, which won over more subscribers, which led to a bigger volume of mobile devices in demand.
However, in Singapore, TeleChoice's mobile retail business suffered losses because of longer replacement cycles.
On the other hand, TeleChoice's other business segment, ICT, is barely profitable in the quarter with profit before tax of just $60,000, up just $10,000 from the year-earlier 1QFY2025.
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The company is focused on the rollout of digital infrastructure, namely, storage solutions, and plans to move toward AI solutions. "The sales cycle is longer for such projects," says Chew.
This current year, the mobile devices segment is seen to remain the main growth driver. TeleChoice's contract with U-Mobile has been extended for another year and Chew expects further extension upon further negotiations.
The company has another business segment in network installation and Chew notes that the company's entry into data centre coolant installations in Indonesia is another area of growth.
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In what might be another significant growth driver, TeleChoice announced in March it was participating in a tender to design and build a data centre project in Malaysia. The tender results will be known within months.
"Award of the Malaysia design-and-build data centre project will provide Telechoice with a significant pivot into a new, faster-growth segment," says Chew.
For now, he has kept his FY2026 earnings estimates but has raised his valuation multiple from 15 x to 18x FY2026 earnings, in line with the recent re-rating of SGX-listed proxies in the system integration sectors.
Chew expects stable growth for the mobile devices segment but warns that a weak rupiah will weigh on growth for the network engineering segment, while the ICT segment is still seeking new growth verticals amid a competitive environment.
In another positive aspect, Chew observes that Telechoice has been undertaking share buybacks as high as 26.38 cents.
TeleChoice International shares closed at 25 cents on May 23, down 1.96% for the day but up 47.06%.
