DeClout

DeClout: FY12 results show decent core growth. Revenue at $53.1m, +39%, mainly boosted by broad-based revenue growth in its IT Infrastructure Services business (97% of sales). Gross margins expanded to 29.0% from 26.8%, mainly due to higher professional service revenue contributed by its IT Infrastructure Services business during the year. Net profit at $$0.5m, -35%, mainly due to the one-off expenses of $1.4m related to the IPO exercise in Oct ’12. Excluding the IPO, net profit would be up ~79% to $1.9m. Mgt expects growth in the IT Infrastructure Services business to continue in FY13, but notes higher operating cost pressure and competition for talent may create downward pressure on margin. The group will embark on a global expansion plan for its IT Asset Recovery Services and Independent Maintenance Services business, and is looking to set up JVs and partnerships with similar industry players in diff geographical locations such as US, Europe and Greater China to tap on their local customer base, mkt knowledge and business connections. For the Vertical Domain Cloud (VDC) segment, the group will proceed with its systematic rollout of all three tiers of its Games Cloud in SE Asia, with launch of the group’s first VDC in 2H13. The Games Cloud is a multi-tier revenue model focused on SE Asia, and is expected to bring in a mixture of subscription and revenue sharing income. In addition, the Group is looking into the growing mobile gaming industry in SE Asia. Hence, it plans to develop a mobile gaming platform to ride on this opportunity. Mgt highlights, as this business segment requires further invmt and is in its early stages of roll-out, does not expect this segment to contribute positively to the Group’s bottom line in FY13. No dividends were declared, as expected. The stock trades at 25.2x P/E (excl IPO expenses), 2.5x P/B.