EFFICEN - Efficient and Sufficient

EFFICEN rides the wind of rumours of bonus issue... Will it be efficient and sufficient to feed the hungry shareholders?

Efficient E-Solutions Berhad (Efficient) is a Malaysia-based investment holding company. The Company, through its subsidiaries, operates in three segments: data and document processing, software development and forms printing. Its subsidiaries are Efficient Mailcom Sdn. Bhd. engaged in the provision of integrated outsourcing solutions in data and document processing, ranging from data extraction, to conversion, formatting of documents, to data printing and preparation of printed documents for distribution by post; Efficient Softech Sdn. Bhd. engaged in the provision of information technology services; Printegrate Sdn. Bhd. engaged in the business relating to Web-finishing products, forms printing, and other related business documents and Efficient International Sdn. Bhd.,an investment holding company. [1] Efficient Storage Solutions Sdn. Bhd. and Efficient Storage Solutions (Techpark) Sdn. Bhd. , which are both related to property investment and provision of document archiving and related services. Livingston Education Sdn. Bhd., which is related to provision of education services. Efficient Digital Esplanade Sdn. Bhd. at the moment is still dormant. The percentage of equity held are all 100% respectively. From here, we can almost see how efficient they are in managing their business. 

1) Fundamental Analysis:

Recently, i am attracted to the news published in The Edge, Efficient E-Solutions to sell two units to Canon Singapore for RM75m.[3] Mr Chairman, Dato' Abdul Latif bin Abdullah, hinting that in his annual report 2014 that the print statement market continues to consolidate with the continuous migration to e-statement and paperless environment. With the implementation of GST, there is also an opportunity in the creating of more printed statements.[2] If we link his words and the news report, it all makes sense. Mr Chairman foresees that the technology will overtake pen and paper, so this might be the reason why EFFICEN is disposing two entire equity stake. (Efficient Mailcom Sdn. Bhd, which holds 100% of Printergrate and Efficient Softech) to Canon Singapore Pte Ltd for RM 75mil cash. The proposed once-off gain will be around 7 sen per share (RM51.7 mil divided by 709 mil shares). The company will also reward its shareholders with RM12.1 mil as special cash dividend. Okay, looks good. Next, when will the deal be realized? The deal is expected to be completed by the end of this year (2015) and dividend to be given within 3 months (until Q1 2016). Currently, the company is a net cash company. If the proposed deal is ON, we can expect the net cash to largely improve in its report.

2) Technical Analysis:

When the news is announced on 25 September, there are some reactions from the insiders. The price opens at 0.22, going up as high as 0.24 and closing at 0.235. On 28 September 2015, there is a  gap up, but the market sentiment is a bit weak, therefore drags down the price to lowest 0.24 and closed at 0.245. There is a gap down on 6 August and 7 August, this is the first resistant. The chart must ease through in order to trend up higher.

Summary: 

EFFICEN is widely diversified in data and document processing, software development and forms printing. Its net profit is healthy, averagely 10.44% for the past 4 years. EFFICEN is worth to monitor:

- "Buy on rumours, sell on facts", or you can aim for the cash dividend.
- Attractive special dividend and increasing net cash per share.
- Dividend will be received in Q1, 2016 if everything being approved.

- Huge volume spiked up on 25 September 2015.
- If the chart can break the gap down on 6 and 7 August, the chart will expect to have an uptrend.
- Please be cautious of downsides of FBMKLCI and volatile global economy.

EFFICEN being efficient and the special dividend is sufficient for you? Your call...

Let's Ride the Wind and Gainvest

Gainvestor 10sai

29 Sept 2015

12.50am

Sources:

[1]: http://klse.i3investor.com/servlets/stk/bizbg/0064.jsp
[2]: Annual Report 2014
[3]: The Edge News: http://www.theedgemarkets.com/my/article/efficient-e-solutions-sell-two-units-canon-singapore-rm75m-0
[4]: Q2 2015 Report