BVQ : BVQ 0%, the provider of IT life-cycle services and data-centre equipment, may gain from a boost in the third-party maintenance (TPM) sector amid a rising focus on environmental, social and governance (ESG) factors and stretched budgets during Covid-19, KGI Securities said in a research note on Thursday.

The research team initiated coverage on Procurri with a "neutral" call and target price of S$0.38, noting that there are likely little to no catalysts to drive up share prices in the near-term, as the company is focusing on restructuring in the wake of the pandemic.

Shares of Procurri were trading flat at 33.5 Singapore cents as at 3.46pm on Thursday.

Procurri, which aids customers with the purchase, disposal and management of used enterprise hardware, will likely benefit from companies looking to meet sustainability goals by switching to TPM vendors for equipment maintenance, instead of depending on maintenance services from original equipment manufacturers (OEM), KGI said.

Apart from its TPM arm that prolongs the lifespan of enterprise hardware, Procurri's IT asset disposition arm recycles or reuses salvageable IT equipment, while its IT distribution arm mostly works with resale equipment, which all align with ESG principles, KGI said.

It added: "As ESG achievements and milestones become more quantifiable and tangible, we can expect tailwinds for TPM vendors who can successfully pitch the sustainability angle to prospective clients."

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Amid tighter budgets for legacy infrastructure and operational spending due to Covid-19, TPM vendors are also more attractive as they offer significant savings potential for companies looking to minimise operational expenditures while still taking on new software and gadgets, compared to the more costly option of getting new equipment from OEMs.

Maintenance costs under TPM are usually 50 to 70 per cent lower, as IT assets are efficiently stretched to operate beyond the usual end-of-support life given by OEM maintenance. A single TPM company can also support multiple OEM brands and reduce overall response times, KGI noted.

Furthermore, the pandemic has accelerated the shift towards cloud services that will eventually trickle down to demand for Procurri's services, with more companies allocating budgets towards remote working and productivity tools, the research team said.

"If data is the new gold, Procurri keeps the gold mine running," it added.

Additionally, KGI said Procurri may gain from a privatisation offer as it could help drive up the market-perceived value of the company.

Although the research team added that another privatisation at this stage would be rather unexpected, Procurri - one of the only few publicly-listed players in the TPM sector - has continued to receive interest from both financial and strategic players, including private equity firm Novo Tellus and major competitor Park Place Technologies.

READ MORE:

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