ECS first quarter profit up 14.9% to HK$65.2mn

Gross margin improves to 5.1% from 4.7% a year ago during the same period as China sales shores up 31.9%.

VST Holdings Limited (“VST”), one of the leading IT product distributors in Asia Pacific, announced the results for its subsidiary, ECS Holdings Limited (“ECS”) for the three months ended 31 March 2011 (“1Q 2011”). ECS net profit attributable to equity holders (“net profit”) for the three months ended 31 March 2011 (“1Q 2011”) rose 14.9% to SGD10.4 million while net margin rose to 1.2% in its seasonally slowest quarter, reflecting better product mix and improved internal efficiencies.

The performance of the Singapore Exchange Mainboard-listed leading regional Info-Comm Technology (“ICT”) solutions provider representing best-of-class global brand names compares with net profit of SGD 9.1 million and net margin of 1.1% in 1Q 2010.

With a focused strategy in enhancing margins, 1Q 2011 gross margin improved to 5.1% compared to 4.7% in 1Q 2010 on a 1.3% rise in Group revenue to SGD842 million in 1Q 2011 from SGD831 million in 1Q 2010.

Excluding the effects of the revenue of the Group’s Malaysian company, ECS ICT Berhad for 1Q 2010, and assuming constant currency effects, the Group’s revenue for 1Q 2011 would have grown by 28.0%. Adjusting for the effects of deconsolidation of ECS ICT Berhad in 1Q 2010 and excluding the currency translation effects, the Group’s NPATMI would have grown by 29.5% year-on-year. This growth in revenue was mainly attributed to higher sales of supplies, networking hardware products and media tablets.

ECS ICT Berhad was deconsolidated from the Group’s results following its initial public offering and listing on the Main Market of Bursa Malaysia Securities Berhad on 15 April 2010.

Geographically, ECS’ China operations continued to dominate, which generated a year-on-year revenue growth of 31.9% to SGD538.0 million in 1Q 2011 compared to SGD408.0 million in 1Q 2010, boosted by new distribution agreements with major global vendors concluded since the second half of the previous year.

As at 31 March 2011, ECS’ cash and cash equivalents were SGD63.0 million, up significantly from SGD57.7 million as at 31 March 2010.

Earnings per share (“EPS”), rose to 2.86 SG cents in 1Q 2011 versus 2.49 SG cents in 1Q 2010 while net asset value (“NAV”) per share increased to 83.27 SG cents as at 31 March 2011 versus 81.18 SG cents as at 31 December 2010.

Commenting on the Group’s 1Q 2011 performance, Mr. Narong Intanate, Group CEO of ECS, said, “ECS has successfully reacted to market changes. As a consequence, our recently implemented product portfolio adjustments and ongoing internal efficiencies have helped to deliver a solid performance even in our seasonally slowest quarter.”

Since late 2010, ECS has re-adjusted its portfolio to concentrate on popular consumer technology products such as the Apple iPad and iPhone, Dell Streak and Samsung Galaxy as well as emerging enterprise products such as virtualisation solutions and data storage, all of which have grown rapidly among existing and new customers.

Additionally, as many of the new product distributorships such as Dell and Lenovo are on a regional level, these have enabled the Group to leverage on growing economies of scale.

On the outlook, Mr. Intanate added, “Economic indicators point to continued growth in our major markets in Asia Pacific and we have already started implementing many strategies to ride on this growth. The next three quarters will see us continuing to enlarge our popular product categories and technologies and expand our geographical footprint in the Asia Pacific region.”

The Group’s proposed Taiwan Depository Receipts ("TDR") listing on the Taiwan Stock Exchange which is currently in progress, will also subsequently help to support the Group’s growth potential. Concurrently, ECS will continue to implement measures to improve ongoing financial efficiencies and cost control and operational efficiencies which will enable it to carry on enhancing bottom-line, according to a VST Holdings report.

Against this background and barring unforseen circumstances, the Directors are confident that ECS' performance in FY2011 will be better than in FY2010.