ECS Corporate Presentation - listed company · 2013. 5. 8. · •ECS ICT Berhad was awarded MSC...
Transcript of ECS Corporate Presentation - listed company · 2013. 5. 8. · •ECS ICT Berhad was awarded MSC...
ECS Corporate Presentation 1Q13 Financial Results Update
8 May 2013
Preferred Supplier of Choice for ICT Products & Value-added Services
CONTENTS
Recent Developments
1Q13 Financial Results
Growth Strategies
Investment Merits
Appendix – Corporate Profile
RECENT DEVELOPMENTS
Continuing to grow products and services portfolio in 1Q13...
Recent Developments
• Expanded tablet PC range
– Appointed by Microsoft to distribute Surface tablet PC
• Surface RT launched in April 2013
• Surface Pro to be launched in June 2013
– ECS now major tablet PC distributor to the local
market, with models from Apple, Samsung, Asus and
Lenovo already in the stable
• Expanded smartphone distribution segment
– Now also the distributor for Lenovo smartphones and
Samsung mobility devices for the enterprise market
– New products augment existing Huawei Ascend P1
offering
• Enhanced Enterprise Systems portfolio
– Appointed by IBM to offer its SmartCloud cloud
computing solutions to the enterprise market
– Inks deal with CA Technologies to distribute its data
management solutions in Malaysia
4
1Q13 FINANCIAL RESULTS
Revenue mainly boosted by tablet and notebook PC sales...
profit, however, affected by lower contribution from
Enterprise Systems
Revenue & Profit Analysis 6
7 Segmental Revenue
+5.2%
YoY +4.0%
YoY
+15.2%
YoY
Revenue
(RM’mil)
1Q12 1Q13
ICT Distribution 197.7 207.9
Enterprise Systems 104.4 108.5
ICT Services 3.3 3.9
Total Revenue 305.4 320.3
1Q13 Revenue: RM320.3 mil
+3.9%
YoY
-22.1%
YoY
+38.7%
YoY
1Q13 Gross Profit: RM19.6 mil
Gross Profit
(RM’mil)
1Q12 1Q13
ICT Distribution 8.4 8.7
Enterprise Systems 12.7 9.9
ICT Services 0.7 1.0
Total Gross Profit 21.8 19.6
ICT Distribution Enterprise Systems ICT Services
All three business divisions report revenue growth...
Enterprise Systems’ profit margin, however, not matching to last year’s
8 Operation Statistics
Continues to optimise working capital needs by controlling debtors’ and inventory levels...
9
Balance sheet remains strong...
Balance Sheet
(RM’mil) As at 31.3.13 As at 31.12.12 Comments
Plant & Equipment 4.7 4.7 -
Other Non-Current Assets 2.3 2.1 -
Current Assets 305.9 324.8 Decrease due to lower debtor level
Current Liabilities 119.0 143.9 Due to lower payables and accruals
Non-Current Liabilities 0.0 0.0 -
Total Shareholders Equity 194.0 187.6 In line with increase in retained profits
Total Borrowings - - No borrowings
Cash & Cash Equivalents 67.1 73.0 -
Gearing (net of cash) (x) Net cash Net cash Able to fund future expansion
initiatives easily
Net Assets/share (RM)* 1.08 1.04 -
*Based on total number of shares of 180.0 mil shares of RM0.50 par
GROWTH STRATEGIES
10
11
Growth in the ICT sector remains unabated... driven by consumer demand and public sector initiatives
Sector Opportunities
• Malaysia’s 2013 ICT spending expected to hit USD10.6 billion (Source: IDC)
– Up 4.0% from 2012’s estimated USD10.2 billion
– Compounded annual growth rate of 8.0% between 2011 and 2016
– To be driven by expected growth in tablet PC, enterprise networking, service provider equipment and smartphone demand
• Consumer demand for smart devices in Malaysia on the rise (Source: IDC)
– Smartphone spending to hit USD2.1 billion in 2013
• Up 30.3% from 2012’s estimated USD1.6 billion
– Tablet PC sales to grow 17.7% to USD664 million
• Good potential for further ICT growth (Source: Media reports)
– Government initiatives like the Economic Transformation Programme (ETP) and Digital Malaysia Master Plan expected to be growth catalysts
– SME investment in ICT still low; opportunity for growth
– Cloud computing adoption in Malaysia inevitable; already made headway in regional neighbours Japan, Hong Kong and Singapore
12 Growth Strategies
Strategies in place to spur the Group forward in non-traditional segments ...
• Expanding tablet and ultrabook PC offerings
– Already distributing Microsoft Surface RT; looking to distribute Surface Pro variant in June
– Ultrabook PCs have high-growth potential
• Main demographic for ultrabooks – enterprise users – posted sales growth in a quarter where consumer PC demand fell (Source: Gartner)
• Cheaper prices of newer, more advanced models in the consumer market can lead to higher PC sales
– Continuing to look for more devices to add to product portfolio
• Eyeing further expansion of smartphone portfolio
– Expanded offerings with Lenovo’s entire line of consumer smartphones; also offering Samsung’s entire range of enterprise mobility devices
– Looking to add more products to tap into market opportunities
• Targeting opportunities in cloud computing
– Augments existing enterprise systems products and services
– Modular IBM SmartCloud enterprise solutions to generate recurring income from both large enterprise and SME clients
INVESTMENT MERITS
13
14 Valuation
Single-digit valuation make the Group an interesting prospect for investors keen on Malaysia’s ICT sector...
Share Price (@ 30 Apr 2013) RM 1.14
Market Cap (@ 30 Apr 2013) RM205.2 mil
Trailing PE Ratio 7.3x
Trailing EV/EBITDA 3.6x
Price to book ratio 1.1x
Historical Net Dividend Yield 4.8%
15
Solid fundamentals, market leader, growth catalysts and dividend policy underpin an interesting investment case...
Investment Merits
Market leader in ICT distribution in Malaysia
Domestic ICT market continues to be growth industry
Cloud computing and mobility devices to be growth catalysts
Net cash position allows for future expansion
Dividend policy of 30% payout’s historical net yield of 4.8%
Single-digit PE valuation an affordable entry into ICT growth proxy
THANK YOU 08 MAY, 2013
APPENDIX –
CORPORATE PROFILE
17
18 Background
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, desktop, computers, printers and software) and value enterprise systems (network, communication infrastructure, servers and enterprise software)
• ECS has working relationships with more than 30 global brands such as Hewlett Packard, Asus, Dell, IBM, Cisco, Microsoft, Apple, Oracle, Epson, Samsung, Buffalo, Adobe, Juniper, Blue Coat, VMWare and Google.
• ECS has a nationwide distribution network of more than 3,000 resellers consisting of retailers, system integrators and corporate dealers.
19 Vision and Mission
Aims to be at the centre of all things IT...
To be the leading provider of ICT products and value-
added services. We strive for sustainable growth to
achieve optimum returns to shareholders. VISION
• To be the preferred supplier of choice for ICT products and
value-added services by building stronger customer
relationships.
• To bring the best-of-breed ICT products and services to
enhance the competitiveness of our customers' businesses.
MISSION
20 Milestones
More than two decades in the ICT industry since the advent of personal computers...
1985 • Began business in marketing personal computers under K.U. Sistem Sdn Bhd (now known as ECS KU Sdn Bhd)
1986 • Management buy-out of K.U. Sistem Sdn Bhd by founders Foo Sen Chin and Dato’ Teo Chiang Quan
• Pericomp Sdn Bhd (now known as ECS Pericomp Sdn Bhd) was formed to distribute peripherals to dealers
1994 • Set up a branch office in Penang
1997/98 • KUS Holdings Sdn Bhd (now known as ECS Kush Sdn Bhd) won the inaugural Enterprise 50 award
• Astar Sdn Bhd (now known as ECS Astar Sdn Bhd) won the Enterprise 50 award
2000 • KUS Holdings Sdn Bhd (now ECS Kush Sdn Bhd) became a 60% subsidiary of ECS Holdings Limited of Singapore
2001 • Listing of ECS Holdings Limited on the SGX Mainboard
2004 • KUS Group of companies adopted the ‘ECS’ corporate identity
• ECS ICT Berhad was awarded MSC status by MDeC
2005 • Introduction of program to install credit card terminals at resellers’ sales points
2006 • Implemented Enterprise Knowledge Portal to improve information storage and sharing
2007 • Establishment of warehouses in Kota Kinabalu and Kuching
2008 • Installation of 720 credit card terminals with over 107 retailers to improve collections
• Implemented the FPX payment gateway which enables direct online payment from resellers
• Establishment of sales office in Johor Bahru and Kuantan
• Launch of our integrated corporate office and warehouse facility in Kota Damansara
2010 • Listing of ECS ICT Berhad on the Main Market of Bursa Malaysia Securities Berhad
2011
• Appointed strategic authorised distributor for Dell’s commercial & consumer products & solutions
• Appointed as Lenovo's distributor for 3 business segments: Consumer, Small & Medium Business and Relationship (corporate)
• Set up of ECS Technology Centre at ECS’ head office, showcasing Oracle Exadata Database machine, the first in Malaysia
• Nominated as one of the companies in "The Edge Billion Ringgit Club“
2012 • Appointed distributor for Google Nexus 7 and Asus Padfone tablet PCs; enters smartphone segment with Huawei Ascend P1 & first foray into cloud
computing
• Signs agreement to distribute Huawei’s entire range of enterprise systems products and services
• Undertook 1-for-2 Bonus Issue
2013 • Appointed distributor for Lenovo smartphones, Microsoft Surface RT, IBM SmartCloud for enterprise and CA Technologies
21 Corporate Structure
Focused on the distribution of ICT products...
ECS ICT Berhad
ECS Kush Sdn Bhd
(100%)
ECS Astar Sdn Bhd
(100%)
ECS KU Sdn Bhd
(100%)
ECS Pericomp Sdn Bhd
(100%)
Management, Financial,
and Logistics services
Distribution of ICT
Products
Provision of ICT
Systems and Services
Distribution of Value ICT
Products
Investment holding and provision of
e-commerce systems and solutions
22 Market Positioning
Well-positioned to play and intermediary role in the ICT supply chain...
Direct Sales Two-Tier Distribution One-Tier Distribution
End Customers
Resellers
Resellers
Retailers, System
Integrators, Corporate
Dealers
ICT Distributors
ICT Principals
23 Business Model
“One-stop shop” ICT supplier for diverse customer base...
ICT DISTRIBUTORS
Channel Development and Management
Logistics
Finance
Services
Pre-sales
System Architecture
Implementation
Training
Post-sales
Maintenance
ICT PRINCIPALS
Value Products
Network &
Communication
Servers
Storage
Software
Volume
Products
PCs
Notebooks
Printers
Supplies
Software
END USERS
Finance
Telco
Manufacturing
Services
Government
Corporate
Enterprises
Commercial
SME
Home
RESELLERS
System
Integrators
Solutions
Providers
Service
Providers
Corporate
Dealers
Retailers
Economies of
Scale and Better
Pricing
Aggregation
Total
solution
Single
Source
Supplier
After sales support
24 Product Portfolio
Principals are the “who’s who” of brands in the ICT industry...
25 Products and Services
ECS distributes a wide array of ICT products and Enterprise Systems... a rare distributor with strong technical support
ICT Products
• Notebooks
• Tablet PCs
• Personal Computers
• Printers
• Software
• LCD Monitors
Enterprise Systems
•Servers
•Network Systems
•Data Centers
•Enterprise Software
ICT Services
• More than 30 engineering
personnel providing support for
ICT products
• Over 150 certifications from 15
principals
26 Distribution Infrastructure
Established and efficient distribution infrastructure backed by advanced logistics centre...
• Purpose-built flagship warehouse in Kota Damansara spanning 40,000 sq ft
• Handles an average intake of 5 containers and output of 25 lorries per day
• Daily sales of RM4 mil to RM5 mil with 400-500 invoices/deliveries
Warehouses & Offices
27 Key Management
Led by industry veterans...
Mr. Foo Sen Chin, Managing Director
• Responsible for steering the Group’s overall corporate direction; instrumental in guiding ECS into a RM1 billion company • Has more than 30 years of experience in the ICT industry • Graduated with a Bachelor of Science in Electrical and Electronic Engineering from the University of Birmingham, UK; later obtained
an MBA from Cranfield School of Management, UK • A key figure in the ICT industry: served as councilor, treasurer, and deputy chairman of PIKOM from 1995 – 2005; on PIKOM’s board
of advisors from 2006 to present
Mr. Soong Jan Hsung, Executive Director
• Responsible for the development of new sales and marketing strategies • Contributed significantly to the Group’s success, especially in market development aspects • Has more than 20 years experience in ICT distribution • Graduated with a Bachelor in Science majoring in Mathematics from the University of Malaya
Mr. Tee Ang Kuan, General Manager
• Responsible for overseeing the Group’s operations such as developing business and marketing strategies, marketing and distribution of ICT products, and sales staff management
• Has about 24 years of experience in the promotion and distribution of ICT products to end users as well as corporate customers
• Graduated with a Bachelors of Art (Honours) majoring in Economics from the University of Malaya
Mr. Chan Puay Chai, Financial Controller
• Responsible for the Group’s financial planning & control, financial compliances, credit management, risk management, and other finance related operations
• Has about 20 years of experience in various key accounting positions • Is an associate member of the Charted Institute of Management Accountants (U.K.) and a registered accountant with the Malaysian
Institute of Accountants
28 Substantial Shareholders
Part of a leading regional ICT player that is listed on the SGX... 33% free float
ECS ICT Berhad
ECS Holdings Ltd Sengin
Sdn Bhd (1)
Oasis Hope
Sdn Bhd (2) Dasar Technologies
Sdn Bhd
(1) Deemed interest of Mr. Foo Sen Chin, Managing Director of ECS ICT Berhad
(2) Deemed interest of Dato’ Teo Chiang Quan, Chairman of ECS ICT Berhad
41.0% 12.2% 5.5%
Listed on SGX, Singapore Incorporated in Malaysia Incorporated in Malaysia Incorporated in Malaysia
8.6%
29 Competitive Advantages
ECS’ leadership driven by established brand name, efficient distribution ability and strong relationships with principals ...
Partnership with Key ICT Players
• Long term track records with more than
30 leading ICT principals
Wide range of ICT products
• More than 3,000 SKUs (Stock Keeping
Unit) sold in FY2012
Effective Financial Management
• Effective inventory management to
minimise product holding cost
• Credit card terminal programme, trade
card programme and ePayment
interfaces to improve collection and profit
margin
Time-tested Distribution Infrastructure
• Extensive network of more than 3,000
resellers
• Timely delivery supported by a fully-
integrated ERP system
Strong Technical Support Team
• Team of 30 certified service personnel
with certifications from leading ICT
principals
Established Name in ICT Industry
• In business for more than 25 years since
the introduction of personal computers
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