Clearing a Checkpoint

We maintain our BUY rating on Scicom with an unchanged 12-month price target of RM2.68 based on 20x FY19E PER. BBC News reported that the party of Cambodian Prime Minister Hun Sen says it has won a landslide victory in Cambodia’s general election held on 29th July 2018. The election victory by the ruling party should ensure policy continuity. This should be conducive for Scicom’s Cambodia project, which is expected to go live by 3Q 2018. Maintain BUY. We continue to like Scicom for its expertise in the e-government services segment, high ROE business model, exposure to the vibrant Cambodian tourism segment and compelling valuation of 14x FY19E PER / 5.0% yield.

Cambodia election: Ruling party claims landslide in vote with no main opposition (BBC News)

BBC News reported that the party of Cambodian Prime Minister Hun Sen, who has been in power since 1985, says it has won a landslide victory in a general election that lacked any serious challengers. The Cambodian People’s Party (CPP) said it had won 80% of the votes, giving it at least 100 of 125 seats.

Policy Continuity Should be Conducive for Scicom’s Cambodia Project

The election victory by the ruling party should ensure policy continuity. This should be conducive for Scicom’s Cambodia project, we believe. To recap, Scicom had in February 2018 secured a project from Cambodia’s Ministry of Tourism to develop, implement, operate and maintain a fully integrated Cambodia Tourism Management System. The tenure of the project is 5 years, with an extension option of 2 years. The project implementation work has started and management expects the system to go live by 3Q 2018. Upon implementation, we forecast the project to contribute to 25- 29% of Scicom’s FY19-20E earnings.

Maintain BUY With An Unchanged Target Price of RM2.68

We maintain our earnings forecasts, BUY recommendation and 12-month target price of RM2.68 based on 20x FY19E PER. We continue to like Scicom for its expertise in the e-government services segment, high ROE business model, exposure to the vibrant Cambodian tourism segment and compelling valuation of 14x FY19E PER / 5.0% yield. Key risks to our positive view are delays in the Cambodian project implementation and weaker than expected revenue from the other business segments.

Source: Affin Hwang Research - 30 Jul 2018