Saturday, August 29, 2009

Scicom Net Profit Up 44% yoy, ROE at 18%

Scicom's net profit jumped 43.7% yoy to RM 8.701 million in the FYE June 30, 2009. Sales increased by 22.3% yoy to RM 144.672 million.

The improvement is mainly due to increased billing from new projects secured during FY2009, gain from forex as USD appreciated vs RM, and contribution from educational division which was launched during FY2009.

However, Scicom’s full year performance was significantly affected by a net loss of RM 0.88 million in 3Q09 due to the provision for doubtful debts on outstanding receivables amounting to RM 4.607 million for debts deemed to have high recoverability risk in the current economic crisis. Another provision was allocated in 4Q09 albeit at a smaller amount of RM 0.478 million, thus bringing the total provision for doubtful debts to RM 5.085 million for FY2009. Risk remains where Scicom may record more provision in the following quarters as current economy still remain in shambles.

But according to Scicom in its 3Q09 report, "The current global financial crisis has also resulted in an increase in recoverability risk for the Group’s receivables. The Group has made sufficient provision for debt that is deemed to have a high recoverability risk."

For 2010, Scicom has a positive view - "The Group continues to intensify its business development activities in all of its business divisions and is confident that the Group will have robust growth for 2010."

FY2009 - ROE at 18.3%, D/E less than 2%, CR at 3.95x
NPM at 10.47% in 4Q09, compared to 7.62% in 4Q08 and 4.47% in 1H09
NPM at 6.01% in FY09 vs 5.12% in FY08

For FY 2008, though sales up 9.14% yoy, Scicom's NPAT declined 46.46% yoy, mainly due to the depreciation of USD vs RM (clients are billed in USD previously), reduction in operating margins by some of the major clients due to cost-cutting measures, and longer than expected sales cycle for major new business. Before that, Scicom had a good track record with increasing sales and higher profits. NPM was 10.38% in FY07 and 11.67% in FY06.

A final dividend of 1.5sen is expected to be paid out in October/November, adding to the 1sen interim dividend paid in March. Total dividend is 2.5sen for FY2009, up 25% from 2sen paid in both 2007 and 2008.

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