INVESTMENT HIGHLIGHTS

• Cambodia project boost

• Prelude to a slew of e-government solutions

• Business Process Outsourcing (BPO) jobs pipeline could improve in 2HFY18

• Maintain BUY with unchanged TP of RM2.36

Cambodia project boost. We came back from a briefing feeling reaffirmed of the bright prospects of the tourism project that was awarded to Scicom by the Cambodian government. While we expect the project to contribute to its FY19F earnings positively, we take a conservative stance for the development and implementation of the system for now as both parties are still fine-tuning some details of the project. Scicom will be paid based on the number of travellers flying in and out of Cambodia. The project to develop, implement, operate and maintain a fully integrated Cambodia Tourism Management System is expected to start in FY19F and will last for five years with an extension option of two years.

Prelude to a slew of e-government solutions. On top of the project that has been awarded, we believe that Scicom can provide other complementary services and/or e-solutions to the Cambodian government in relation to the nation’s security and e-payment systems. We also opine that the award of this project could be a prelude to potentially more e-government projects from other developing nations that do not currently have existing integrated solutions for certain administrative solutions. Scicom’s capabilities in these areas include border control, e-visas and employees’ permits.

BPO jobs pipeline could improve in 2HFY18. Besides egovernment projects, Scicom could also see better jobs flow from its business process outsourcing (BPO) segment as the re-strategising plans of its customers could have been completed and that they should be implementing new campaigns in the coming quarters. Hence, we expect revenue from the BPO segment to improve in 2HFY18. We also anticipate for the income from Education Malaysia Global Services to improve in the coming quarters as foreign student e-visa registration is expected to normalise from the previous dip due to closures of certain colleges. We have already imputed job replenishment in our forecast previously.

Source: MIDF Research - 12 Feb 2018