ECS Holdings

ECS Holdings: CIMB has an unrated report. The house notes that despite its low-margin business, ECS earned a sizeable S$34.4m in FY13 net profit and consensus forecasts EPS growth of 11-15% in FY14-15. ECS’s regional network makes it an attractive M&A target and think that China operations if spun-off could create value. The house believe that ECS is an attractive M&A target, especially for Japanese IT services companies that lack regional presence. VST Holdings’ willingness to explore improving ECS's liquidity and value creation via the spin-off of ECS’s China operations could be a game changer. ECS is Not Rated but the house estimate a fair value of $0.72 (7-year P/E mean of 6x) to $0.75 (7-year P/BV mean of 0.68x), based on consensus forecasts.