Scicom (MSC) Berhad Shares Surge 80% in a Year, Outpacing Broader Market

KUALA LUMPUR – Investors in Scicom (MSC) Berhad (KLSE:SCICOM) have witnessed a remarkable rally over the past year, with the stock's total return, including dividends, reaching approximately 80%. This performance starkly contrasts with the broader Malaysian market's return of around 6.1% over the same period, excluding dividends.

The company's share price alone has climbed 68%, significantly outpacing its modest earnings per share (EPS) growth of 0.9%. This divergence suggests a notable shift in market sentiment and increased investor optimism towards the business process outsourcing specialist. Analysts often view such a gap as the market pricing in future growth expectations rather than current earnings alone.

However, a longer-term perspective tempers the exuberance. Over three years, the stock's gain sits at a more subdued 23%, highlighting the volatility and cyclical nature of tech-related investments. The recent surge raises questions about sustainability and whether the current valuation aligns with the company's fundamental progress.

"The past year has been exceptional for Scicom shareholders," said David Chen, a portfolio manager at Kuala Lumpur-based Horizon Capital. "The outsized return, largely fueled by dividend yield and positive sentiment, indicates the market is rewarding its niche in digital customer experience solutions. However, investors should scrutinize whether this growth rate is replicable or if we're seeing a cyclical peak."

A more critical view came from Sarah Lim, an independent market analyst. "This is classic short-term market froth," she commented sharply. "A 68% price jump on less than 1% EPS growth? The math doesn't add up for a value investor. It feels detached from fundamentals, and when the sentiment shifts, the correction could be just as steep. People are chasing momentum, not value."

Michael Raj, a retail investor who has held Scicom shares for five years, offered a balanced take. "The recent year has been fantastic, sure, but the five-year annualized return is about 12%. That's solid, not spectacular. It reminds us that patience is key. The dividend component has been a steady contributor, which is often overlooked in these hype-driven analyses."

Total Shareholder Return (TSR), which accounts for dividends, capital raises, and spin-offs, provides the fuller picture for Scicom. The 80% one-year TSR notably exceeds the share price gain, underlining the importance of its dividend policy. The company's recent performance marks an acceleration compared to its medium-term track record, prompting both opportunity and caution among market watchers.

While current momentum is strong, experts advise investors to consider the broader context, including market conditions, sector risks, and the company's ability to translate market optimism into sustained earnings growth. As with any stock showing rapid appreciation, a thorough review of underlying business health is recommended before investment.

Market return data in this article reflects the market-weighted average of stocks trading on Malaysian exchanges.