CGS-CIMB Research analyst William Tng has undertaken a preliminary assessment of Multi-Chem in an unrated report dated April 5.

In the report, Tng notes that Multi-Chem primarily distributes and offers training for information technology (IT) security products via its subsidiary M.Tech Group. The IT security business accounted for 99.5% of the Group’s FY2020 ended December revenue. 

Products are distributed across 29 cities in 15 countries, including Singapore, Australia, Greater China (including Hong Kong and Taiwan), India, Indonesia, Japan, Korea, Malaysia, Myanmar, New Zealand, Philippines, Sri Lanka, Thailand, United Kingdom and Vietnam.

M.Tech Group also provides IT training in Singapore for products from companies such as Allot, Check Point, and Symantec. 

SEE:Multi-Chem's 2H20 earnings more than double to $10.5 mil

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Tng notes that Multi-Chem reported revenue growth of 5% y-o-y to $479.7 million, which management attributes to an increase in customer demand arising from the increased reliance on digital technologies during the Covid-19 pandemic.

Net profit for the period came in at $17.8 million, while net cash stood at $77.8 million. FY2020 dividend per share (DPS) was maintained at 6.6 cents

Looking ahead, Tng says management is focusing on its best-of-breed products and will continue to look out for opportunities for regional expansion to drive growth. The company will also continue promoting the M.Tech brand name and intends to work closely with key partners to further promote their products.

From a valuation standpoint, Tng states that Mult-Chem trades at a historical FY2020 P/E of 7.1 times and P/BV of 1.10 times.

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The group has been in a net cash position between FY2016 to FY2020,  while dividend yields have ranged from 3.2% to 4.7% over the same period.Net cash per share as of end-December 2020 was 86.4 cents, 61.7% of its closing price of $1.40 on April 1.

As at 3.04pm, shares in Multi-Chem are up 4 cents or 2.82% higher at $1.46.