Sunday, July 08, 2012

ECSB has Present Values and Future Potentials

ECS ICT Berhad ( ECSB) has more cash in the bank than its paid-up capital. As at 31 Dec 2011, the company has RM66.577 million cash while is paid-up capital is only RM60 million. It has zero borrowings.

ECSB distributes ICT products of the most popular brands in the world through its 2500 resellers. It also provides value-added product support and technical services. 

Because of its small-cap and ill-liquidity, the stock is hardly covered by any analyst. Thus the majority of investors hardly pay any attention to it. To me, this stock is a rare gem. For the fiscal ended 31 Dec 11, it pays a single-tier dividend of 8 sen. At the last traded price of RM1.56, the dividend yield is 5.128.

With so much cash in the bank and a commendable first quarter result for this year, the stock is likely to improve its dividend payment. A bonus issue may also be in the offing. The stock certainly merits an upward rating.

ICT products are no longer luxury items. In fact, they are now necessities in life. The i-pad, for example, is now an educational toy for the very young to the very old. Children from as young as two years are using it. Old folks use it as a toy and a tool for business and pleasure as well. Needless to say, the i-phones and computers are just as important. 

For the reasons mentioned above, demands for ICT products are set to grow over the years. ECSB is certainly set to benefit from this trend. Hence, the stock is an excellent stock to buy and own at the present price of below RM1.60 per share.