ECS Holdings

ECS Holdings: OCBC maintains Buy with $0.56 TP. House met up with the management of ECS Holdings following its recent 2Q13 results. Revenue and net profit rose 23.5% and 11.0% YoY to $1,017.5m and $9.0m, respectively. However, after adjusting for forex and other exceptional items, estimate that core earnings declined 7.3% YoY from $7.4m to $6.9m, which was below our expectations. On a positive note, ECS managed to lower its net gearing ratio from 59.4% (as at end 2Q12) to 38.5% (as at end 2Q13) due to good working capital management. Looking ahead, expect ECS to be a beneficiary of new product launches by major IT vendors such as Apple. House trim FY13 and FY14 core net profit forecasts by 6.2% and 3.9%, respectively.