KUALA LUMPUR (Feb 20): VSTECS Bhd, formerly known as ECS ICT Bhd, saw its net profit rising 29.6% to RM10.73 million in its fourth quarter ended Dec 31, 2019 (4QFY19), from RM8.28 million in the year-ago quarter, as sales improved.

This lifted the ICT products distributor’s earnings per share to six sen, from 4.6 sen in 4QFY18, its exchange filing today showed.

The group proposed a final dividend of three sen per share, payable on June 17, bringing its total dividend for FY19 to 5.5 sen.

In its filing, VSTECS said its quarterly revenue jumped 21.5% to RM542.1 million, from RM446.1 million previously, on better sales due to improved market conditions compared with a year ago when the sales and service tax (SST) was implemented in September 2018.

“With higher sales, the gross profit increased 14.9% to RM28.2 million, from RM24.5 million last year,” it added. 

The higher sales were seen across all three of its business segments, namely ICT distribution, enterprise systems and ICT services, although the profitability of its ICT distribution business was weaker during the quarter, owing to lower margin and higher operating expenses.

VSTECS added that its finance income was lower by RM424,000 during the quarter, mainly due to lower cash balance after it utilised some funds to acquire shares in an associate company.

Overall, with the higher sales, gross profit and share of profit in associate and joint venture for RM1.6 million, VSTECS said its profit before tax (PBT) increased 26.9% to RM14 million from a year ago.

For the full year (FY19), VSTECS registered a net profit of RM29.59 million, up 20.3% from RM24.60 million in FY18. Annual revenue came in 10.4% higher at RM1.80 billion, versus RM1.63 billion in the preceding year.

Despite ending the year on a strong footing, VSTECS is cautious on its FY20 outlook and expects demand from the consumer segment to remain challenging given the lower forecast of Malaysia’s gross domestic product (GDP) growth rate this year.

It added that the Covid-19 outbreak has also resulted in supply disruption on the shipments of ICT products from China.

“Due to the current market uncertainties from disruption of the ICT hardware supply chain, we are cautious on the outlook for FY20,” VSTECS said.

The group plans to improve its consumer products revenue and market share by increasing its e-commerce penetration.

“We shall utilise our business-to-business (B2B) and the various business-to-consumer (B2C) platforms to reach out to more resellers and end customers.

“With government initiatives of driving digital transformation and the implementation of new telco 5G networks, we are confident of securing more enterprise systems projects for this year,” it said.

Shares in VSTECS settled unchanged at RM1.39 after 632,000 shares were traded today. The stock has risen nearly 40% over the past six months, valuing the group at RM248.94 million.