ECS Berhad

ECS Berhad

3 Business segment

a) ICT Distribution

Distribution of Volume ICT products to resellers, comprising mainly of retailers. Distributor of Lenovo , Samsung, Microsoft, Asus, BenQ, Apple smartphones, DJI drones, smartwatches and tablets.

b) Enterprise Systems

Distribution of Enterprice ICT products to resellers, comprising mainly of system integrators and corporate dealers such as the Veeam Software.

c) ICT service

Provisioning of ICT systems and services.

Annual Earning

Year  (31 Dec)	2012	2013	2014	2015	2016
Revenue(‘000)	1,276,120	1,326,266	1,591,117	1,903,299	1,823,383
Net Profit (‘000)	29,864	26,888	29,432	32,488	30,142
Profit Margin (%)	2.3	2	1.8	1.7	1.7
EPS (cents)	22.2	14.9	16.4	17.9	16.7
DPS (cents)	5.5	5.5	6	11	6
DPR(%)	33.2	36.8	36.7	60.9	35.9
ROE (%)	16.6	13.7	13.7	14.1	12.2
P/E (31 Dec)	3.42	6.31	6.16	8.38	9.25 (18/2/2017)

Net Cash/Net Debt (Annually)

Year (31 Dec)	2012	2013	2014	2015	2016
Total Cash (RM‘000)	72,989	83,700	89,749	116,237	110,215
Total Debt (RM‘000)	-	-	-	-	-
Net Cash/  (Net Debt)	72,989	83,700	89,749	116,237	110,215

Quarterly Earning

Quarter	31 Mar 2016	30 Jun 2016	30 Sept 2016	31 Dec 2016
Revenue (‘000)	434,715	400,181	436,908	551,579
Net Profit (‘000)	5,122	6,297	6,146	12,577
Profit Margin (%)	1.18	1.57	1.41	2.28
EPS(cents)	2.8	3.5	3.4	7.0
Total EPS (4QR)	15.5	14.6	15.4	16.7
P/E	10.65	10.27	9.48	8.38

Net Cash/Net Debt (Quarterly)

Quarter	31 Mar 2016	30 Jun 2016	30 Sept 2016	31 Dec 2016
Total Cash (‘000)	92,632	76,873	89,772	110,215
Total Debt (‘000)	-	-	-	-
Net Cash/  (Net Debt)	92,632	76,873	89,772	110,215

Revenue & PBT based on division

Year	2016	Percentage
Revenue	RM ‘000
ICT Distribution	1,408,045	77.22%
Enterprise Systems	377,889	20.72%
ICT Services	37,449	2.06%
Total Revenue	1,823,383	100%
Profit Before Tax
ICT Distribution	20,864	51.68%
Enterprise Systems	15,598	38.64%
ICT Services	1,422	3.52%
Others	2,487	6.16%
Total Profit Before Tax	40,371	100%

Company Prospects

-  Business outlook for 2017 remains challenging due to the current soft economic environment.

-   For 2017, International Data Corporation (IDC) has forecasted 6.2% growth on the ICT products that ECSB is distributing in Malaysia.

-  ECSB have planned to grow their market share on PC, Notebook and Smartphone while exploring new opportunities on Internet of Things (IoT).

-   For Enterprise Systems, ECSB will invest in the latest technology trends to focus on Hyper-Converged Infrastructure and Cyber Security products.

Editor’s Opinion

Strength

-          Zero debt, net cash company.

-          Over 30% dividend payout ratio

-          Dividend yield is more than 3%

-          Recorded a new high in the latest quarter (31 Dec 2016)

Weakness

-          Low profit margin, less than 2%.

-          High product cost due to weak Ringgit against USD.

-          Revenue decreased yoy for all 3 business segments.

-          Decrease in EPS.

DISCLAIMER

Everything above is for sharing purpose only.

This is NOT a buy or sell call.

BUY OR SELL AT YOUR OWN RISK !!!

We have no responsibility on anything upon reading this article.