mocicsNot that I know off..except one foreign broker came out with a non-rated report - sounded pretty positive. No TP per se though.
PiggybankNot bad. Foreign broker covering Scicom. More to come
PiggybankScicom started as a BPO company but has morphed into a significant e-government service player by being the sole agent to the MoE in processing foreign student visas. According to the company, it processed an estimated 66k applications in 2015. ● In 2016, Scicom said it will venture into e-commerce through “estore” by cross-selling products/services to foreign students. It will get a cut from every sale and company expects the monetisation of foreign student database to yield strong positive results. Malaysia’s e-commerce market in 2010-14 grew at a 34% CAGR. ● Net margins have been on an upward trajectory due to its egovernment business. NP was +56% YoY in FY14 and +50% in FY15. Consensus expects 22% EPS growth in FY16. In 1H16, Scicom’s EPS was +34% YoY and management expects a stronger 2H with new BPO contracts that it has recently signed on. ● Due to its asset-light business model, Scicom generates ROEs of 40-45%. Based on consensus, it trades at 19.0x FY16 P/E, offers a 3.5% dividend yield and is in a net cash position. Scicom prides itself on being more than just a call centre Scicom (Mkt cap: US$196 mn, 3M average daily value: US$0.3 mn) began operations in 1997 (listed in 2005) as a business process outsourcing (BPO) company. The competitive advantage it has over customer contact hubs, such as India and the Philippines, is its domain knowledge across vast industries and multilingual staff (30 languages). According to the company, it has served/is serving big corporate clients like Nokia, Singtel, McDonald's, AirAsia, HP, Pepsi, etc, typically under long-term contracts. Currently, it has 45 corporate clients and is not overly dependent on any single one; >70% of revenues are derived overseas. Scicom prides itself on being more than just a call centre but instead, a "mini Accenture" providing consulting and technology services, as 92% of its staff are qualified graduates. As the business model is replicable across industries and countries, it is continuously looking to expand its client base. Government contract provides concession-type income In recent years, Scicom has managed to break into a new business segment, dubbed "e-government". The Education Malaysia Global Services (EMGS) contract was awarded by the Ministry of Education (MoE) in 2013 and involves Scicom providing the backend engine which processes all foreign student visa applications in Malaysia. We understand from management that it is a 10-year cost-plus concession. In 2014, Scicom processed 55k visa applications (+87% YoY) and this grew an estimated 20% to 66k in 2015. Management is upbeat on growth prospects, as the education sector in Malaysia is one of the key thrusts of the Economic Transformation Programme (ETP) and measures are being taken to push foreign student enrolment to 200k by end-2020. Malaysia has ~618 higher learning institutions (including colleges, universities and polytechnics). Breaking into e-commerce in 2016 In 2016, Scicom will launch “e-store” which entails cross-selling products/services to foreign students. According to management, it will tie up with 1-2 telco service providers, banks and another 50-plus companies (including cinemas, F&B, retail, etc.) and Scicom will get a cut from every sale of product/service. Management expects the monetisation of the database to yield large positive results. To put this into perspective, Malaysia’s e-commerce market saw a 34% CAGR between 2010 and 2014. According to 11street and iPay88, Malaysia’s online transactions per capita doubled year on year in 2015. Net profit grew at a 27% CAGR between FY11 and FY15 Scicom's FY11-15 net profit experienced a 27% CAGR (June yearend). In FY14, NP was +56% YoY and in FY15 +50%. Net margins have been on an upward trajectory and the boost in FY14 was due to the maiden contribution from its e-government business. About 45% of profits are derived from BPO and the remainder from government contracts. Consensus expects 22% EPS growth in FY16. In 1H16, Scicom's net profit was +34% YoY and management is guiding for a stronger 2H with the new BPO contracts that it has recently signed on. The group is in a net cash position and has consistently paid dividends (77% payout in FY15). The asset-light business model also gives rise to high ROEs in the range of 40-45%. Based on consensus, the stock is trading at P/Es of 19.0x in FY16 and 16.3x in FY17, and offers a 3.5% yield. Similar companies such as MyEG and Prestariang, which also operate e-government services in the country, trade at 26.9x and 25.0x FY16 P/E, respectively.
mocicsCheaper to buy Scicom - at that valuation stock will be over RM3!!!!
ASIAN stocks may have rebounded from their worst start of the year, but that is not because of turnaround in the global economy.
The rebound is because of the Federal Reserve’s dovish stand on the US interest rate hike that spurred investors to search for yield outside of the US.
Libra Invest Bhd chief executive officer Jason Lee (pic) reckons that the market would continue to be influenced by any decision by the Fed.
“Any indication for an earlier-than-expected rate hike could heighten volatility again,” he tells StarBizWeek.
“Should this scenario play out, we expect to see a decline in oil prices due to the negative correlation between US dollar appreciation and oil prices,” he says.
Despite his views on the Fed’s influences on market movements, Lee says Libra’s investment strategy is not just chasing the sectors but to focus on stock-selection strategies.
“Our investment strategy is more of a bottom-up approach and tries to identify companies with resilient growth and strong balance sheet to weather the volatility,” he says.
He says the investment firm concentrate on not more than 15 stocks at a time and prefers to avoid companies that are highly geared in the current market.
“We were relatively cautious at the end of 2015 with cash holdings of over 40%. However, we have been deploying the cash since February,” he says.
Libra Invest oversees about RM5.7bil fund. The firm mainly invest in fixed income and equities. About 35% of the fund are allocated for overseas investment.
Lee says that although most of the fund allocation is on fixed income instruments, equities are the main kicker.
“The volatility in the equity market for the last six to nine months had put off some investors, but for us, it is all back to the fundamentals,” he says.
Among his main focus in stock-picking is the company’s management team, particularly in terms of the management’s strategies and outlook.
“Once you believe in the management vision, you will need to wait for the execution part. We are trying to push through a long-term value investing strategy. We get to know the companies very well, so that we don’t see the need to invest in 40 companies or more,” he says.
Although there are still deflationary pressures and economic recovery is sluggish in the developed economies, growth in the Asean countries are bolstered by infrastructure development projects and consumer growth is still robust.
“The Asia ex-Japan market looks attractive after underperforming developed market peers in recent years. Particularly Asean ex-Singapore is among the fastest-growing and most dynamic regions in the world,” Lee says.
Lee says he prefers consumer-related stocks in countries like the Philippines and Indonesia.
“Even though their valuation are higher than Malaysia, gross domestic product (GDP) growth in the Philippines and Indonesia are higher than Malaysia, at above 5%,” he says.
“Most Asean economies are dominated by domestic consumption. But what makes the Philippines stands out is its resilient economy. The country is expected to report the strongest growth this year due to its resilient business-process-outsourcing industry and foreign workers remittances as well as its low dependence on exports.
“The other major Asean countries are export-driven and highly leveraged to global trade,” he adds.
On Lee’s view on Malaysia, he reckons that the valuation is “neither cheap nor expensive, just a lack of catalysts”.
He says the overall consumer sentiments are expected to remain weak from the high cost of living due to subsidies rationalisation, the weak local currency that hurts imports and the rise in unemployment.
“However, pockets of opportunities persist especially in sectors that benefit from higher infrastructure spending and companies that offer relatively high dividend yield and resilient earnings,” he says.
Lee says one counter that he particularly likes on Bursa Malaysia is Scicom (MSC) Bhd because of its unique business structure.
“This company has evolved from a pure business process outsourcing (BPO) company into a business solutions provider. It has one of the most unique BPO business structure in the region, particularly its multi-national staff force.
“This uniqueness becomes a need in a globalised world. In addition, as the business model is replicable across industries and countries, it is continuously looking to expand its client base overseas as well,” he elaborates.
“We are negative on telecommunications and banks as they are going through some structural changes.”
Lee says volatility in the stock market and ringgit is mainly driven by crude oil prices.
“While crude oil prices are finding its floor and stabilising around US$30-US$40 a barrel, the market begins to realise that the ringgit has dropped too much too fast,” he says.
“But we believed the ringgit would not strengthen any higher from it’s current level, especially if the US eco
Chia Seng SoongThis company has been performing since in YR 2010. The Company has solid financial position and ROE has been more than 20% since YR 2010. I believe in those companies which have strong cash flow and good ROE, their share prices will be performing if we were to hold their shares for long term despite of the daily market fluctuation. Market weak , it only signals us to buy in more~
cch1975Mocics and piggybank any update recently? So quiet?
mocicsResults expect to be announced towards end of the month, should be strong. Time to load up before results??
shazzaHi people, hope you managed to take profit at Scicoms peak. I am quiet mostly, volatility so high. but miss scicom eventhough can be pretty slow but steady mostly.
mocicsHoping for 2.5 sen in dividend this quarter...
mocicsA break out trade in the making...results due next week - this quarter should see net income of over RM12m????
stockistMocics, don't dream. I heard its less than that.
mocicsI am an eternal optimist - if not for a RM1.36m exchange loss, they would be close to RM12m net...Good news is that cash level has increased to RM36.6m (from RM24m) - of course this is before the 2 sen dividend payment to be ex on 3rd June and payable on 21st June.
Still think this company can go very far in the long run...
mocicsThat is 2 sen per quarter...8 sens per year. Hoping for 9 sens this year..Have to wait for final quarter to see if possible or not.
DJDJOTHERS MULTIMEDIA SUPER CORRIDOR MALAYSIA STATUS (MSC STATUS) GRANTED TO SCICOM E SOLUTIONS SDN BHD (1170061-P), A WHOLLY-OWNED SUBSIDIARY OF SCICOM (MSC) BERHAD
DJDJThe Board of Directors of Scicom (MSC) Berhad is pleased to announce that on 11 October 2016, its 100%-owned subsidiary, Scicom E Solutions Sdn Bhd (“SES”) had accepted the grant of MSC Status by the Government of Malaysia. The Government has also approved SES’s application for the Pioneer Status Incentive under the Promotion of Investments Act, 1986 for 100% income tax exemption on statutory income derived from the MSC Malaysia Qualifying Activities (hereinafter defined) for a period of 10 years from the date of the Pioneer Certificate (an application of which shall be made within twenty-four (24) months from the date of the approval letter) subject to the Conditions of the Grant.
allanchong1988Hi every Sifu here, Is Scicom benefit from weaker ringgit?