Ban Leong Technologies Ltd - CGS-CIMB Research 2018-09-06: 25-Year Track Record In It Product Distribution

Ban Leong Technologies Ltd - CGS-CIMB Research 2018-09-06: 25-year Track Record In It Product Distribution BAN LEONG TECHNOLOGIES LIMITED SGX:B26

Ban Leong Technologies Ltd - 25-year Track Record In It Product Distribution

  • Ban Leong has more than 25 years of experience as an IT products distributor, focusing on the Southeast Asian market.
  • The company has been listed on the Main Board of the Singapore Stock Exchange (SGX) since Jun 2005.
  • Ban Leong achieved record-high pretax profit in FY3/18 due to its focus on its core Southeast Asian market and disposal of its Australian operations.
  • Ban Leong is keen to increase its exposure to the China/Hong Kong market in a prudent manner.
  • The stock trades at a historical FY18 P/E of 5.2x, with dividend yield of 7.1%.

Established IT products distributor

~ ~ Where SG investors share
  • Incorporated in 1993, Ban Leong is a technology products distributor for a diverse range of IT accessories, multimedia and data storage products.
  • Over the past 25 years, Ban Leong believes it has made its brand name synonymous with fashionable, innovative and user-focused tech-savvy products through regular marketing activities.
  • Ban Leong is currently the authorised distributor for more than 178 products sold under 52 brand names.

Product segments

  • In FY18, the IT accessories segment accounted for 33% of Ban Leong’s revenue, while the multimedia segment comprised 65%. The remaining 2% of FY18 revenue was derived fived from the data storage segment.
  • In terms of FY18 operating profit, IT accessories accounted for 51%, followed by the multimedia segment with 48% and the data storage segment with 1%.

Strong earnings performance in FY18

  • Management believes that FY18 marked a new earnings growth phase for the group, when it achieved record-high pretax profit of S$6.4m. Total DPS of 1.75 Scts was paid with respect to FY18. FY18 was the 13th consecutive year that Ban Leong has paid out dividends.
  • On a cumulative basis, Ban Leong has paid S$0.1595 in dividends since its listing on the SGX Main Board in 2005.

Southeast Asia to stay core market, with eye on Hong Kong/China

  • Ban Leong intends to continue focusing on its core Southeast Asian market. The group is also exploring opportunities in Hong Kong and China, as it hopes to expand its presence there. It expects the global IT industry to continue to be very competitive. Hence, careful management of product mix is crucial to sustain profit margins and optimise returns.
  • Ban Leong also offers IT products for sale through its own e-store, as younger consumers tend to make most of their purchases online.

Historical valuations

  • Ban Leong trades at a historical FY18 P/E of 5.2x and dividend yield of 7.1%. 
  • On a historical FY18 P/BV basis, Ban Leong trades at 0.97x against ROE of 18.6%.

Not Rated
Target Price: N/A

William TNG CFA CGS-CIMB Research | 2018-09-06
SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998 Same 99998

* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.