ECS Holdings

ECS Holdings: Reported a 11% y/y increase in its 2Q13 PATMI to $9.0m on the back of a 23.5% hike in revenue to S$1,017.5m. However, if we exclude forex and other exceptional items, core earnings would have decreased 7.3% to $6.9m, which was below expectations due largely to a lower-than-estimated gross margin. For 1H13, revenue increased 22.0% to S$2,107.8m, forming 50.1% of FY13 forecast. Core net profit rose 9.6% to S$15.4m. On a positive note, ECS generated healthy net operating cashflows of $50.6m in 2Q13, which helped to lower its net gearing ratio from 50.1% (as at end 1Q13) to 38.5% (as at end 2Q13). OCBC note that the house will provide more details after meeting up with management. Meanwhile, maintain BUY rating but $0.57 fair value estimate is under review.