Scicom has secured a 5 + 2 year project from Cambodia’s Ministry of Tourism to develop, implement, operate and maintain a fully integrated Cambodia Tourism Management System. We are positive on the contract win – while details are scarce, we see good prospects in Cambodia’s fast-growing air travel market. Elsewhere, Scicom has reported a modest set of results – 6MFY18 core net profit slipped by 4% to RM21m while DPS was maintained at 4 sen, largely within expectations. Maintain BUY. We like Scicom for its expertise in the egovernment services / e-solution segment, high ROE business model and attractive valuation of 12.4x FY18E PER.

Scoring a 5 + 2 Year Cambodia Tourism Project …

Scicom has been awarded a project by Cambodia’s Ministry of Tourism to develop, implement, operate and maintain a fully integrated Cambodia Tourism Management System. The project tenure is for 5 years, with a 2 year extension option. Scicom announced that the anticipated revenue from this contract is predicted on the number of air travellers to and from the Kingdom of Cambodia.

… should give Scicom a slice of the fast growing Cambodia’s air travellers market (2.7m inbound tourism in 2016A)

We like the prospects of Cambodia’s air travellers market. Statistic reports from Cambodia’s Ministry of Tourism indicate that the number of international tourists arrivals by air grew by 13%-CAGR from 1.48m in 2011 to 2.70m in 2016. Meanwhile, VINCI Airports had in 2016 doubled the capacity of Phnom Penh and Siam Reap airports to 10m passengers and the Cambodian government recently approved plans to build a US$1.5bn airport in Kandal province, 30km south of Phnom Penh. The expansions underscore the developers and government’s conviction in the Cambodia air travel market.

6MFY18 Core Net Profit Fell by 4% to RM21.2m

Elsewhere, Scicom reported a modest set of results – 6MFY18 core net profit slipped by 4% yoy to RM21m due to lower revenue, partly cushioned by higher margin. 6MFY18 revenue fell by 14% yoy due to lower contribution from both tne Business Process Outsourcing (BPO) and Education Malaysia Global Services (EMGS) segments. EBITDA margin however expanded by 3.8-ppt to 30.1% on stringent cost control (right-sizing) and higher margins from ad-hoc short-term projects undertaken.

Source: Affin Hwang Research - 8 Feb 2018