ECS

ECS: appointed by Apple as the main distributor for iPads in China, and has begun distributing the iPad to resellers across all cities in the country in Oct. This comes as Apple ramps up iPad distribution globally ahead of the Xmas purchasing season...

ECS has a strategic relationship with Apple going back 15yrs. In 1999, ECS was awarded the distribution rights for Apple's range of consumer and professional desktop pdts in SG, Msia and Thailand. The CEO of ECS’ China unit, Mervyn Mao previously served as Group Snr VP of Digital China Hldgs, one of China’s leading Info & Comms Technology (ICT) distributors, which also won the right to distribute the iPad in China on 25 Aug…

Industry est 1.8m iPads to be sold in ’11 alone. There is huge potential for growth in sales growth of Apple pdts, given the significant untapped demand as Apple has only ~1% of mkt share in China today.
Other catalyst is the recently proposed TDR listing, in which the co plans to issue <20% new shares…

Stock gives historical div yield of 5.3%. Payout has doubled since ’08, while net profit has grown every yr since 2004. 1H10 net profit at $24.6m makes up 65% of FY09 net profit.
Valuation appears attractive. Stock trades at 4.4x P/E, and 0.75x P/B vs 15+% ROE. This compares with Digital China’s (861 HK) 18.2x P/E, 3.2x P/B.
Biggest risk is low trading liquidity...

Technicals. Stock has been range bound for the past 6 mths. Indicators are neutral to slightly positive. Price appears well supported at $0.51. Watch for break out above $0.605.