ECS Corporate Presentation 3Q15 Financial Results Update 5 November 2015 Preferred Supplier of Choice for ICT Products & Value-added Services
3Q15 Operations Highlights 3Q15 Financial Results Growth Strategies Investment Merits Appendix CONTENTS 2
3Q15 OPERATIONS HIGHLIGHTS 3
ICT Distribution sales still going strong in the dampened market… demand remains sluggish for Enterprise Systems • PC and mobility products continue to drive ICT Distribution – Boosted by expanded range of mobility products (ASUS Zenfone 2, Microsoft Mobile and Xiaomi’s MiPad in 1H15) coupled with strong sales of PCs • Slower project implementations impact Enterprise Systems – Lower sales of networking hardware, hi-end servers and storage – Slowdown also affected ICT Services billings 3Q15 Operations Highlights 4
3Q15 FINANCIAL RESULTS 5
Strong double-digit sales growth in 3Q15, though profitability impacted by less-favourable product mix and steep rise in USD vs MYR … 9m15 performance commendable +18.6% -28.7% -34.7% +23.4% +14.4% +13.1% 6 Revenue & Profit Analysis
ICT Distribution recording 9 th consecutive quarter of year-on- year growth, largely due to mobility products … overall Group margins mainly impacted by forex ICT Services Enterprise Systems ICT Distribution ICT Distribution Enterprise Systems ICT Services Revenue Gross Profit ( RM’mil ) 3Q14 3Q15 3Q14 3Q15 ICT Distribution 278.5 358.0 9.5 10.7 Enterprise Systems 98.5 94.1 7.1 5.7 ICT Services 15.0 13.0 2.2 1.9 Total 392.0 465.1 18.8 18.3 3Q15 Segmental Revenue 7
All segments seeing expanded revenue in 9m15 lifted by pre- GST spending and favourable product mix in 1H… Enterprise Systems ICT Distribution ICT Distribution Enterprise Systems ICT Services Revenue Gross Profit ( RM’mil ) 9m14 9m15 9m14 9m15 31.4 39.7 ICT Distribution 792.0 1,049.2 Enterprise Systems 311.5 320.9 23.7 22.9 ICT Services 36.1 36.7 5.7 5.4 Total 1,139.6 1,406.8 60.8 68.0 9m15 Segmental Revenue 8
Working capital days returns to normal… cash conversion at best-ever level of below 30 days from faster-moving inventory Operations Statistics 9
On track to set a new revenue record in FY2015… +18.6% yoy +7.4% yoy Revenue Trend 10
Profitability impacted by less favourable product mix … FY14 ROE: 13.7% (FY13: 13.7%) FY14 ROA: 7.7% (FY13: 7.9%) -34.7% yoy +6.5% yoy Profit Trend 11
Robust balance sheet with healthy cash position… ( RM’mil ) As at 30.09.15 As at 31.12.14 Comments - Plant & Equipment 3.5 3.3 - Other Non-Current Assets 2.0 2.0 Improves largely due to higher cash and Current Assets 444.4 406.5 cash equivalents, as well as receivables, deposits and prepayments - Current Liabilities 209.1 187.7 - Non-Current Liabilities 0.0 0.0 Retained earnings continue to strengthen Total Shareholders Equity 240.8 224.1 Total Borrowings - - No borrowings Cash & Cash Equivalents 124.0 89.7 Cash per share of 69 sen as at 9m15 Net cash position allows future Gearing (net of cash) (x) Net cash Net cash expansion - Net Assets/share (RM)* 1.34 1.24 *Based on total number of shares of 180.0 mil shares of RM0.50 par Balance Sheet 12
Declares interim and special dividend in conjunction with Group’s 30 th anniversary … 8.0 Dividend policy of minimum 30 % of net profit # Adjusted for 1-for-2 bonus issue *To be paid on 10 December 2015 Dividend History 13
GROWTH STRATEGIES 14
Malaysia’s ICT sector continues to be robust with increased demand for mobility products and potential of IoT devices… • Malaysia ICT sector to grow 14.2% in 2015 (Source: PIKOM) Growth to be driven by higher demand for IT services especially from e- commerce and online transactions • Increasing demand for affordable smartphones (Source: IDC) ASUS’ smartphone sales climbed to no. 2 from no. 3 due to popularity of ZenFone 2 (as at 1H15) Lenovo climbed to no. 4 from no. 6 previously, largely due to its bundled low- end model (A319) with local SIM packs sold at an affordable price • Internet of Things (IoT) market to be one of the fastest growing segments in Asia Pacific (Source: Frost and Sullivan) Total IoT spend forecasted to be USD59 billion by 2020 Malaysia, India, Thailand and Indonesia expected to be among fastest growing markets Sector Opportunities 15
ECS spearheading leadership in the ICT and now IoT space … hopeful of returning Enterprise Systems projects soon • To expand ICT Distribution portfolio with new wave of products – Targeting new products such as ‘wearables’ and ‘ IoT ’ • To grow Enterprise Systems segment – Closely working with System Integrators and vendors to seek out new private and public sector projects • Windows 10 anticipated to be precursor to next tech upgrade • To continue to expand ICT Services – Still on the lookout for potential merger and acquisition opportunities to increase the Group’s value added services Growth Strategies 16
INVESTMENT MERITS 17
Undemanding valuation for growth- centric consumer stock… commendable dividend yield 1-year stock performance Share Price (@30 Oct 2015) RM1.47 Change (31-Oct-14 to 30-Oct-15) ECS:MK +7.30% Market Capitalisation ('mil) (@30 Oct 2015) RM264.6 FBMKLCI:IND -9.38% ECS 1-year Outperformance +16.68% 12 months trailing PE 8.3x 12 months trailing PE (net of cash) 1 4.4x 12 months Trailing EV/EBITDA 3.3x Price to Book Ratio 2 1.1x Historical Dividend Yield 3 4.1% Source: Wall Street Journal 1 Net of cash per share of RM0.69 per share (as at 30 Sep 2015) 2 Based on Net Assets per share of RM1.34 (as at 30 Sep 2015) 3 Based on total dividend declared of 6.0 sen per share in respect of FY14 Valuation 18
Market leadership, growth catalysts and dividend policy underpin ECS’ investment case... Market leader in ICT distribution in Malaysia Domestic ICT market continues expansionary mode Mobility devices to be growth catalyst Net cash position allows for future expansion Dividend payout policy of 30% on net profit Proxy to growing ICT spending with consistent dividend payout Single digit PE valuation Investment Merits 19
Bursa Code: 5162 THANK YOU Bloomberg: ECS:MK www. ecs m.com.my
Appendix 21
CORPORATE PROFILE 22
Malaysia’s leading ICT distribution hub... • Established in 1985, ECS is in the business of distributing ICT products in Malaysia. • ECS ’ range of products include volume ICT products (notebooks, personal computers, smartphones, tablets, printers and software) and value enterprise systems (network, communication infrastructure, servers and enterprise software). • ECS has working relationships with close to 40 global brands such as Hewlett Packard, Lenovo, Asustek, Dell, Oracle, Microsoft, Cisco, Apple, IBM and VMWare. • ECS has a nationwide distribution network of more than 5,000 resellers consisting of retailers, system integrators and corporate dealers. Background 23
Aims to be at the centre of all things IT... To be the leading provider of ICT products and value- VISION added services. We strive for sustainable growth to achieve optimum returns to shareholders. • To be the preferred supplier of choice for ICT products and value-added services by building stronger customer MISSION relationships. • To bring the best-of-breed ICT products and services to enhance the competitiveness of our customers' businesses . Vision and Mission 24
Recommend
More recommend
