May[12] - Declout (Proxy to IoT, Big Data and eCommerce era)

COUNTER: DECLOUT LTD

OVERVIEW:
Listed on Catalist Board in 2012, Declout is a Singapore based incubator of next-generation Information and Communication Technologies (ICT) companies with enviable track record. It's portfolio companies are grouped within two segments: IT Infrastructure (Infra) and Vertical Domain Clouds (VDC). The former forms one-stop data centre deployment and operations value chain, and latter focus on building e-Commerce VDC. Last December, it established investment subsidiary which involves in incubation and fund-raising facilitation for startups and growth enterprises.

Until now, it has built a range of IT products and solutions that are deployed across Asia-Pacific, US and Europe. It's subsidiaries as below.

HIGHLIGHTS:
[1]  On FY2016, it successfully spun off two business from Infra segment: the $156m listing of Procurri on SGX Mainboard and also completion of divestment of Acclivis to CITIC Telecom Group for up to $75m. It demonstrated the group's capability in invest-to-harvest strategy. 

[2] Last quarter saw the revenue and gross profit up 11% and 23% year on year. Both Infra and VDC segment saw significant growth. However it registered net loss 3.4m, due to administrative expenses incurred from newly setup joint venture and acquisition. Management indicated that first quarter used to be traditional slower period. Same quarter last year saw net loss 4.4m.

[3] Its debt gearing is 27%, with majority to be repaid in following year.

INVESTMENT THEMES:
[1] 1Q Earning per shares - (0.0041) || Book Value - 0.172
Last trading price, 0.162 translates to PB ~ 0.9.

[2] Record of excellent growth in revenue and earning over past five years.

[3] Subsidiary, Beaqon (telecommunications, network infrastructure and security arm) has been identified as next growth driver. Aligned with Singapore government's push towards a Smart Nation, Beaqon well position to be an end-to-end ICT market leader. Last year, it clinched major contracts in the build out of new data centres in Singapore, as well as key network infrastructure projects.

[4] Company has been buying back shares since April 2016. The directors also raised shareholding from open market recently as well. Holding on cash $34m, management is seeking for opportunities in further M&A.

PRICE TREND:
Price is hovering near to two year support ~ 0.161. Accumulation activity happened around last April.