Analysts positive on Scicom’s Cambodia tourism project

KUALA LUMPUR: Scicom (MSC) Bhd’s (Scicom) Cambodia tourism project gained positive views from analysts and they expect the project to contribute positively to the company from the financial year 2019 forecast (FY19F) onwards.

According to Scicom in its announcement on Bursa Malaysia, the project was awarded by the Ministry of Tourism of the Kingdom of Cambodia.

The project involves the development, implementation, operation, and maintenance of a fully integrated Cambodia Tourism Management System. The project is expected to take five years with an extension option of two years.

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) said: “We are positive on this announcement as we expect this project to contribute positively to the company from FY19F onwards.

“The income from this project will be tied to the number of air travellers to and from Cambodia. The number of travellers to Cambodia was estimated at five million in 2016.”

Meanwhile, on Scicom’s second quarter of FY18 (2QFY18) and overall first half of FY18 (1HFY18) results, the research team noted that Scicom’s performance came

We are positive on this announcement as we expect this project to contribute positively to the company from FY19F onwards.

MIDF Research

in line with expectations.

“1HFY18 earnings came in within expectation, making up 50 per cent of ours and 46 per cent of consensus’ estimates,” it said, noting that Scicom’s earnings for the period came up to RM20.4 million.

It added that Scicom’s net profit for 1HFY18 fell 15.6 per cent to RM20.4 million as revenue declined by 14.3 per cent to RM88.9 million.

“Revenue from Malaysia slid by 10.9 per cent to RM24.1 million while revenue from the Philippines dropped by 25 per cent to RM11.3 million in 2QFY18. The lower revenue is attributed to change in

requirements and strategies by its business processes outsourcing (BPO) customers.

“On top of that, it is estimated to have processed lower number of visa applications for foreign students looking to study in Malaysia,” it explained.

On a quarterly basis, MIDF Research noted that Scicom’s 2QFY18 net profit declined 22.3 per cent year-on-year (y-o-y) and 14.3 per cent quarter-on-quarter (q-o-q).

“The lower quarterly profit is attributed to revenue for 2QFY18 which slipped by 16.6 per cent y-o-y to RM43 million. The lower revenue is because of lower income from the Education Malaysia Global Services and change in strategies from its BPO customers.

“The q-o-q drop in net profit is largely due to the fewer student visas processed as it was in the yearend holiday season,” it said. The research team also noted that Scicom’s profit after tax (PAT) fell sharper than revenue due to higher taxes which was at 12.2 per cent during the quarter compared to 8.8 per cent a year ago.

“On a brighter note, its operating margin improved to 26 per cent in 2QFY18 from 23.3 per cent y-o-y indicating that management’s cost cutting measures are taking effect,” it highlighted.

All in, MIDF Research pegged a ‘buy’ call on the stock.