Mocics and piggybank any update recently? So quiet?

Libra Invest focuses on stock picks

TheStar Sat, Apr 16, 2016



ASIAN stocks may have rebounded from their worst start of the year, but that is not because of turnaround in the global economy.

The rebound is because of the Federal Reserve’s dovish stand on the US interest rate hike that spurred investors to search for yield outside of the US.

Libra Invest Bhd chief executive officer Jason Lee (pic) reckons that the market would continue to be influenced by any decision by the Fed.

“Any indication for an earlier-than-expected rate hike could heighten volatility again,” he tells StarBizWeek.

“Should this scenario play out, we expect to see a decline in oil prices due to the negative correlation between US dollar appreciation and oil prices,” he says.

Despite his views on the Fed’s influences on market movements, Lee says Libra’s investment strategy is not just chasing the sectors but to focus on stock-selection strategies.

“Our investment strategy is more of a bottom-up approach and tries to identify companies with resilient growth and strong balance sheet to weather the volatility,” he says.

He says the investment firm concentrate on not more than 15 stocks at a time and prefers to avoid companies that are highly geared in the current market.

“We were relatively cautious at the end of 2015 with cash holdings of over 40%. However, we have been deploying the cash since February,” he says.

Libra Invest oversees about RM5.7bil fund. The firm mainly invest in fixed income and equities. About 35% of the fund are allocated for overseas investment.

Lee says that although most of the fund allocation is on fixed income instruments, equities are the main kicker.

“The volatility in the equity market for the last six to nine months had put off some investors, but for us, it is all back to the fundamentals,” he says.

Among his main focus in stock-picking is the company’s management team, particularly in terms of the management’s strategies and outlook.

“Once you believe in the management vision, you will need to wait for the execution part. We are trying to push through a long-term value investing strategy. We get to know the companies very well, so that we don’t see the need to invest in 40 companies or more,” he says.

Although there are still deflationary pressures and economic recovery is sluggish in the developed economies, growth in the Asean countries are bolstered by infrastructure development projects and consumer growth is still robust.

“The Asia ex-Japan market looks attractive after underperforming developed market peers in recent years. Particularly Asean ex-Singapore is among the fastest-growing and most dynamic regions in the world,” Lee says.

Lee says he prefers consumer-related stocks in countries like the Philippines and Indonesia.

“Even though their valuation are higher than Malaysia, gross domestic product (GDP) growth in the Philippines and Indonesia are higher than Malaysia, at above 5%,” he says.

“Most Asean economies are dominated by domestic consumption. But what makes the Philippines stands out is its resilient economy. The country is expected to report the strongest growth this year due to its resilient business-process-outsourcing industry and foreign workers remittances as well as its low dependence on exports.

“The other major Asean countries are export-driven and highly leveraged to global trade,” he adds.

On Lee’s view on Malaysia, he reckons that the valuation is “neither cheap nor expensive, just a lack of catalysts”.

He says the overall consumer sentiments are expected to remain weak from the high cost of living due to subsidies rationalisation, the weak local currency that hurts imports and the rise in unemployment.

“However, pockets of opportunities persist especially in sectors that benefit from higher infrastructure spending and companies that offer relatively high dividend yield and resilient earnings,” he says.

Lee says one counter that he particularly likes on Bursa Malaysia is Scicom (MSC) Bhd because of its unique business structure.

“This company has evolved from a pure business process outsourcing (BPO) company into a business solutions provider. It has one of the most unique BPO business structure in the region, particularly its multi-national staff force.

“This uniqueness becomes a need in a globalised world. In addition, as the business model is replicable across industries and countries, it is continuously looking to expand its client base overseas as well,” he elaborates.

“We are negative on telecommunications and banks as they are going through some structural changes.”

Lee says volatility in the stock market and ringgit is mainly driven by crude oil prices.

“While crude oil prices are finding its floor and stabilising around US$30-US$40 a barrel, the market begins to realise that the ringgit has dropped too much too fast,” he says.

“But we believed the ringgit would not strengthen any higher from it’s current level, especially if the US eco

Directors bought again.

After met up with fund managers. The share prices start dropping.

Heard big wave next week?

Mocics look like foreign fresh fund is coming in from overseas. Usually afternoon only move. Maybe due to time zone different?

Mocics any new development recently?

SCICOM (SCIC) is a unique BPO (Business Process Outsourcing) play in Malaysia. SCIC was founded in 1997 and has not made any loss since inception. Listed in Bursa Malaysia in 2005. One of its uniqueness is its ability to offer a multinational/multi-language work force to meet the needs of its diverse client base (multi country, multi industry). From its BPO base, the company is now diversifying into CRM consulting, technology services and E-government (“digitizing of government systems”) businesses. Currently, BPO accounts for 60-65% of SCIC’s revenue and E-Government accounts for 35%. SCIC’s business strategy is to shift more towards E-Government business, which offers stronger growth potential. E-government offers (1) longer contract duration of >10 years (vs BPO’s 1-2 years), (2) stronger growth prospects of 20-30% Y-Y (vs BPO’s 5-10%) and (3) higher margins of 20% (vs BPO’s 10%).

BPO business(60-65% of its revenue):

Exposed to diversified business segments(45 corporate clients/30 languages/18 industry verticals). There is no dominant sector among SCIC’s client base. The contribution from their biggest client does not exceed more than 15% of their BPO revenue.

Customer names includes SingTel, McDonald’s, Air Asia, Lenovo, Huawei, BMW, TESCO, PEPSI, Fujitsu, etc….

SCIC’s positioning is between India’s BPO(more consulting/software) and Philippine’s BPO(basic jobs like call centers, etc). SCIC’s cost is higher than one in Philippine, But SCIC can offer regional support to MNCs using Malaysia’s young and multi-national labor forces with relatively cheap costs. China’s Huawei is one of SCIC’s customers and required for regional supports from SCIC. They don’t go to Philippine/India BPOs due to limited capabilities(languages, etc.).

E-Government business (35% of its revenue):

SCIC provides the backend engine for EMGS, a wholly owned subsidiary of the Malaysian Ministry of Education. All foreign students seeking to study in Malaysia are required to apply for a student visa via the EMGS portal.

EMGS provides a one-stop visa center for foreign students. EMGS’s prospects are good as more and more foreign university branch campuses are set up in Malaysia(i.e. Iskandar).

In 2014, 54,728 applications were submitted through EMGS, Malaysia government targets 200,000 foreign students by 2020. The fee for EMGS is MYR2000/transaction.

Currently, SCIC’s E-Government customers are EMGS and Cambodia government (for digitization of Cambodia government’s system for agricultural exports).

Outlook. SCIC believes there are opportunities on EMGS data that it can capitalise on. Thus it is looking into solutions to help students including an e-commerce student store to help set up bank accounts, medical and obtaining prepaid cards. In 2014, there were 52,478 visa applications and 20,000 renewals, applications are 87% higher than in 2013. Potential earnings driver for the EMGS contract could be the influx of foreign university branch campuses such as University of Nottingham, University of Newcastle, and University of Reading , Xiamen University etc. as well as boarding schools such as Alice Smith, Epsom College, Kolej Tunku Jaafar which would be a big attraction for students from developing countries. The government would continue to take initiatives to increase the number of schools and students as education remains a crucial component under ETP to transform Malaysia into a high-income nation. With the ringgit depreciation, education in Malaysia is also relatively cheaper compared to other countries.

Valuation. SCIC is positioning itself in a niche market as a government e-service provider and this market has high barriers to entry as many competitors offer only consulting expertise but lack the technical and implementation capabilities. SCIC trades at 16x PE vs. MYEG at 20x PE, Datasonic at 23x and Prestariang at 22x PE.

At 20x PE, SCIC is fair valued at RM2.80.

Result out. Quite happy.

Mocics what happened to scicom?

Big drop scicom.

Mocics foreign investor or foreign investors?

Mocics any bonus issues? The price movement looks like 2014 before bonus announcement? Thanks

Hit day high 2.25 ...any update Mocics?

I am talking about market prices.

8cts how can you target rm3 to 3.60:(

Mocics you still stick to your earlier forecast DPS for her whole year will be in total of 10 to 11cts? Are you over optimistic or conservative figures?

Govt or private co?

Good morning Mocics. So the business in Cambodia is like EMGS for processing foreign students visa?

That means their dividend declaration no different compared with proceeding q2 even their profit up 30% yoy. They already entered cambodia business for their e-govt? Thanks.

Mocics what is your view about this coming q2 result& dividend declaration? Do you think they can give 2.5cents and result will up 40% yoy ? Thanks.

Mocics any new development of Scicom recently? Thanks

Q1 result out. Q 2 usually in FEB.

First of many? U mean besides combodia other countries as well?

Mocics u heard they already secured e govt for cambodian govt true?very chunky and big projects.

Anything that annoys you is teaching you patience.

Wah Scicom secured Huawei besides Lenovo& Fujitsu. This year so many big projects secured include Dialog Axiata in Sri Lanka. But share prices still zzzzzzzzz.

Nope. After listened to BFM boost my confidence. Mocics your target of RM3 need to take long time to hit:)

Breakfast Grille: Scicom Consulting The World https://t.co/sfrU9D3oW6

I don't think so kanmibo. This stock no more energy!

Mocics I think scicom can't challenge myeg. Result out prices drop like hell. It is the time to change car.

Mocics what you mean by coy of contra win? I thought they already secured dialog axiata in Sri lanka.

AGM on Monday at Eastin Hotel PJ at 10am tomorrow . Those go please update us the latest news. Thanks.

Mocics if they give 2cts per quarter dividend there is no different also. By right improving earning dividend must go up between 2.5 to 3cts per quarter.

Prudent management so this make them for the past two years with 50% earning growth better than MYEG. In term of ROE and PE it is better than MYEG too.

How about 2.5 cts?:)

Mocics do you think they will give 3cts dividend per quarter?

Myeg is moving like hell and this stock still zzzzzzz

Pls read the latest annual report 2015. It surprises me a lot. This co will be growing rapidly.

What is the conference name?

Mocics they already met HK investor?

AGM on 30 nov. Usually same day they will announce.

Besides that EPF also increasing their shares plus some new institution funds like cimb. ( 2015vs2014 annual report)

From the annual report under e-govt a lot of things they do like biometric solution, migrant system, visa processing, border control system even covering Interpol, terrorist etc. Fantastic move! You may log on to bursa and read . I believe you can discover many things .

Annual report 2015 out.

Scicom secured Employer of choice 2015 Gold Award! Salute them. This co is too good to be true.

Scicom is really lacking of energy compare with myeg.

http://www.theedgemarkets.com/my/article/scicom-sweet-spot

Earning looks good reflects in chart.

3cents very hard right?