CFA Society Singapore
SINGAPORE (Oct 17): DeClout has proven its expertise in growing and spinning off tech companies since its 2012 Catalist listing, according to a unrated report by Maybank Kim Eng.
The company’s biggest success has been the July listing of Procurri – an IT hardware distribution business – on the Singapore Exchange Mainboard, according to analyst Jonathan Cheong.
This listing has garnered a return of investment of over 200%, or an unrealised gain of more than $50 million, notes Cheong. This also marked a first in SGX history of a catalist company spinning off a subsidiary to list on the Mainboard.
While Procurri currently trades below its IPO price, DeClout is still bullish about Procurri’s growth prospects, believing that the company could triple earnings in the upcoming two years from organic and inorganic growth.
“The recent increase in DeClout’s stake in Procurri from 46.5% to 47.3% is a reflection of this optimism,” says Cheong.
DeClout also has an imminent divestment coming up, of Acclivis to CITC Telecom, highlights Cheong, which could net it up to $45 million, and deliver ROI of 165%.
DeClout plans to distribute a portion of the proceeds to shareholders, and use the rest for debt reduction and expansion. The company also believes that this could be a start to a strategic relationship with buyer CITIC Telecom.
Declout currently has other firms in its portfolio such as Beacon, Corous 360 and vCargo Cloud. While the stakes in Procurri and Acclivis accounts for 16 cents per share, the market currently values the other companies at 4 cents per share, a 33% discount to the net asset value of 6 cents per share for these companies, notes Cheong. Should these assets generate a 200% ROI in value unlocking, it could translate to an additional 12 cents per share.
Shares of DeClout are up 0.5 cent at 20.5 cents.