Scicom surges 7% after announcing higher dividend (2016)

29 Aug 2016 (Mon)

KUALA LUMPUR (Aug 29): Scicom (MSC) Bhd jumped as much as 7% or 15 sen to RM2.25 this morning after the group announced an interim dividend of three sen last Friday (Aug 26).

The outsourcing services company was one of the top gainers this morning. At 10.56am, the counter pared some gains to trade at RM2.20, which was 10 sen or 4.76% higher than its previous close.

Last Friday, the group announced in a bourse filing that its net profit grew 4.9% year-on-year to RM11.11 million in the fourth quarter ended June 30, 2016 (4QFY16) from RM10.6 million, while its revenue increased by 11.53% to RM53.68 million from RM48.13 million.

For the full year ended June 30, 2016 (FY16), the group achieved a net profit of RM41.95 million, which was 20.91% higher than RM34.69 million in FY15. Its revenue also climbed 11% to RM196.3 million versus RM176.83 million a year ago.

The group also announced an interim dividend that will be ex on Sept 8. The interim dividend brings the group's full-year dividend to nine sen, which is higher than 7.5 sen in FY15.

Affin Hwang Capital's analyst Yap Po Leen said in a note to her clients today that Scicom's FY16 earnings were within her expectation, while the group's FY16 earnings before interest, taxes, depreciation and amortisation (EBITDA) margin continued to improve by 3.2 percentage points to 25.1%.

"Scicom continues to be an attractive e-government service play and the group has the expertise to expand their e-government service contracts regionally," she said while reaffirming "buy" call on the counter with a target price of RM2.62.

However, she noted, 4QFY16 was the first quarter the group's tax rate increased to 22.8%, bringing the FY16 tax rate to 7.4%.

Scicom was first awarded the Multimedia Super Corridor (MSC) status in November 2002 and the latest renewal is a further five-year term which expires in November 2017.

The income tax exemption on the company's business income was revised down from 100% to 70% for the remainder of its MSC status beginning November 2015, said Yap.