ECS Corporate Presentation 1Q13 Financial Results Update 8 May 2013 Preferred Supplier of Choice for ICT Products & Value-added Services
Recent Developments 1Q13 Financial Results Growth Strategies Investment Merits Appendix – Corporate Profile CONTENTS
RECENT DEVELOPMENTS
Continuing to grow products and services portfolio in 1Q13... • 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 Recent Developments 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
All three business divisions report revenue growth... Enterprise Systems’ profit margin, however, not matching to last year’s 1Q13 Revenue: RM320.3 mil 1Q13 Gross Profit: RM19.6 mil +5.2% YoY +4.0% -22.1% YoY YoY +3.9% +38.7% YoY +15.2% YoY YoY ICT Distribution Enterprise Systems ICT Services Revenue 1Q12 1Q13 Gross Profit 1Q12 1Q13 (RM’mil) ( RM’mil) ICT Distribution 197.7 207.9 ICT Distribution 8.4 8.7 Enterprise Systems 104.4 108.5 Enterprise Systems 12.7 9.9 ICT Services 3.3 3.9 ICT Services 0.7 1.0 Total Revenue 305.4 320.3 Total Gross Profit 21.8 19.6 Segmental Revenue 7
Continues to optimise working capital needs by controlling debtors’ and inventory levels... Operation Statistics 8
Balance sheet remains strong... (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 Balance Sheet 9
GROWTH STRATEGIES 10
Growth in the ICT sector remains unabated... driven by consumer demand and public sector initiatives • Malaysia’s 2013 ICT spending expected to hit USD10.6 billion (Source: IDC) – Up 4.0% from 2012 ’s estimated USD 10.2 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 USD 1.6 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 Sector Opportunities 11
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 Growth Strategies 12
INVESTMENT MERITS 13
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% Valuation 14
Solid fundamentals, market leader, growth catalysts and dividend policy underpin an interesting investment case... 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 Investment Merits 15
08 MAY, 20 13 THANK YOU
APPENDIX – CORPORATE PROFILE 17
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. Background 18
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 19
More than two decades in the ICT industry since the advent of personal computers... • Began business in marketing personal computers under K.U. Sistem Sdn Bhd (now known as ECS KU Sdn Bhd) 1985 • Management buy- out of K.U. Sistem Sdn Bhd by founders Foo Sen Chin and Dato’ Teo Chiang Quan 1986 • Pericomp Sdn Bhd (now known as ECS Pericomp Sdn Bhd) was formed to distribute peripherals to dealers • Set up a branch office in Penang 1994 • KUS Holdings Sdn Bhd (now known as ECS Kush Sdn Bhd) won the inaugural Enterprise 50 award 1997/98 • Astar Sdn Bhd (now known as ECS Astar Sdn Bhd) won the Enterprise 50 award • KUS Holdings Sdn Bhd (now ECS Kush Sdn Bhd) became a 60% subsidiary of ECS Holdings Limited of Singapore 2000 • Listing of ECS Holdings Limited on the SGX Mainboard 2001 • KUS Group of companies adopted the ‘ECS’ corporate identity 2004 • ECS ICT Berhad was awarded MSC status by MDeC • Introduction of program to install credit card terminals at resellers’ sales points 2005 • Implemented Enterprise Knowledge Portal to improve information storage and sharing 2006 • Establishment of warehouses in Kota Kinabalu and Kuching 2007 • Installation of 720 credit card terminals with over 107 retailers to improve collections 2008 • 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 • Listing of ECS ICT Berhad on the Main Market of Bursa Malaysia Securities Berhad 2010 • Appointed strategic authorised distributor for Dell’s commercial & consumer products & solutions 2011 • 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“ • Appointed distributor for Google Nexus 7 and Asus Padfone tablet PCs; enters smartphone segment with Huawei Ascend P1 & first foray into cloud 2012 computing • Signs agreement to distribute Huawei’s entire range of enterprise systems products and services • Undertook 1-for-2 Bonus Issue • Appointed distributor for Lenovo smartphones, Microsoft Surface RT, IBM SmartCloud for enterprise and CA Technologies 2013 Milestones 20
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