ECS Holdings Limited’s (ECS) 3Q14 revenue grew 21.3% YoY to S$1.1b mainly on the back of a 52% jump in Enterprise Systems (ES) revenue to S$490.8m, but was partly offset by a 6.9% decline in Distribution (DT) Segment revenue to S$622.3m. Its 3Q14 PATMI increased 11.2% YoY to S$9.7m with a flat net profit margin of 0.9%. For 9M14, ECS’ PATMI came in slightly below our expectation as it formed 72.0% of our FY14 projections while revenue was in-line at 74.1% of our FY14 projections.

ECS’ 9M14 revenue declined 1.1% YoY to S$3.1b while PATMI grew 1.2% to S$26.2m as its strategy to shift focus from the lower margin DT segment to higher margin ES segment appears to be paying off. As ECS remains suspended for trading since 25-Sep when its public float dropped below 10%, we continue to put our BUY rating and FV under review until further announcement is made.

Source: OCBC Research - 13 Nov 2014