ECS ICT BERHAD (Company No.: 351038-H) Lot 3, Jalan Teknologi 3/5, Taman Sains Selangor, Kota Damansara,47810, PJ, Selangor

Tel: +603 6286 8222 Fax: +603 6140 0030 Corporate Website: www.ecsm.com.my

For more information, please contact: Ms. Caren Lwee, ECS ICT Berhad | T: +603-6286 8222/ +6012-626 6855 | E: carenlwee@ecsm.com.my Ms. Julia Pong, Aquilas Advisory (Malaysia) Sdn Bhd | T: +603-2711 1391/+6012-390 9258 | E: julia@aquilas.com.my

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‘The Consumer Tech Proxy…’

BUSINESS OVERVIEW Established in 1985, ECS is a leading ICT distributor in Malaysia. ECS distributes ICT products through an efficient network of more than 5,500 resellers nationwide, consisting of retailers, system integrators, and corporate dealers, backed by advanced logistics management system and warehouses in Kota Damansara and Penang. ECS also has sales offices in Kuantan, Johor Bahru, Kuching, and Kota Kinabalu. Currently, ECS has close to 40 authorised distributorships from global ICT brand names & offers about 3,000 Stock Keeping Units (SKUs) of volume ICT Products & value Enterprise Systems.

PRODUCT RANGE & SERVICES Distribution Products Notebooks

Personal Cmputers (PCs)

Smartphones

Tablets

Wearables

Drones

VR goggles

Printers & Supplies

Software

Enterprise Systems Servers

Network Systems

Data Centres

Enterprise Software

Cloud Services

ICT Services More than 40

engineering personnel providing support for ICT products

Over 200 certifications from 15 principals

PRINCIPALS

REVENUE AND GROSS PROFIT BREAKDOWN

COMPETITIVE ADVANTAGES Established brands name: 30 years in ICT business Entrenched partnership: More than 40 global brands Extensive product range: About 3,000 stock keeping units (SKU) Expert technical support: >40 certified personnel Efficient distribution network: >5,500 ICT and mobility resellers Effective financial management: Innovative and efficient accounts receivable

collections and optimum stock level

SECTOR OPPORTUNITIES Smartphone shipments slowed down in 1Q16 (Source: IDC) o Malaysia smartphone shipments dipped to 1.8 mil units in 1Q16 (4Q15: 2.5 mil) o ASUS maintains position at no.2

111 mil units of wearables to be shipped in 2016 (Source: IDC) o 20.1 mil smartwatches were shipped in 2015 out of 80 mil wearable units o Group represents key brands like Apple, ASUS, Huawei and Moto

Commercial spending on drones to reach USD21 bil in 5 years (Source: Goldman Sachs)

o USD11 bil from construction industry, while USD6 bil from agriculture market o Group targeting commercial market with new drone models and brands

Worldwide VR market to grow to USD70 bil in 2020 from USD6.7 bil in 2016 (Source: TrendForce)

FINANCIAL PERFORMANCE

(RM’mil) 2Q16 2Q15 Change 1H16 1H15 Change

Revenue 400.2 418.8 (4.4%) 834.9 941.6 (11.3%)

Gross Profit 21.9 23.5 (7.0%) 42.9 49.4 (13.1%)

PBT 8.3 10.7 (21.9%) 15.3 23.4 (34.5%)

PATMI 6.3 8.0 (21.3%) 11.4 17.4 (34.3%)

Net EPS (sen)# 3.5 4.4 (20.5%) 6.3 9.7 (35.1%)

Gross Margin 5.5% 5.6% (0.1 pt) 5.1% 5.2% (0.1 pt)

PBT Margin 2.1% 2.5% (0.4 pt) 1.8% 2.5% (0.7 pt)

# Based on 180.0 mil shares

ECS recorded revenue of RM400.2 mil in 2Q16 (2Q15: RM418.8 mil) on lower sales in all three business segments. ICT Distribution revenue dipped 1.9% to RM312.3 mil in 2Q16 (2Q15: RM318.3 mil) due to slower sales of mobility products of tablet and smartphones. Enterprise Systems segment posted RM79.9 mil, while ICT Services recorded RM8.0 mil in 2Q16 (2Q15: RM89.7 mil and RM10.8 mil).

This led to 2Q16 net profit declining 21.3% to RM6.3 mil (2Q15: RM8.0 mil), with basic earnings per share at 3.5 sen (2Q15: 4.4 sen).

For 1H16, group net profit declined 34.3% to RM11.4 mil (1H15: RM17.4 mil) on revenue of RM834.9 mil (1H15: RM941.6 mil). The Group’s performance in the previous year was largely boosted by exceptional sales in 1Q15 prior to the implementation of the Goods and Services Tax on 1 April 2015.

1H16 revenue from the ICT Distribution segment was 5.9% lower at RM650.3 mil (1H15: RM691.1 mil), while Enterprise Systems and ICT Services posted RM167.9 mil and RM16.7 mil respectively (1H15: RM226.8 mil and RM23.7 mil). Basic earnings per share for 1H16 was at 6.3 sen (1H15: 9.7 sen).

DIVIDEND HISTORY

ECS has a dividend policy of distributing minimum 30% of net profit to shareholders

#Adjusted for 1-for-2 bonus issue

GROWTH STRATEGIES To permeate Malaysian homes with VR

goggles o Began distributing Orion range of VR goggles o Orion VR goggles to drive smartphone sales o In discussion with high-end VR vendors

To enhance ICT Distribution portfolio o Working on adding new smartphone brands to effectively cover a broader

market segment from affordable to premium brands o In talks with other drone manufacturers to grow the lower end customer and

commercial segments o Targeting to add new products and models from existing brands in 2H16

To continue growing Enterprise Systems and ICT Services segments o Introducing enterprise Flash Memory Storage to replace disc drive storage o Working hard to secure new projects from public and private sector o ICT Services segment constantly seeking new avenues to introduce value-

added services

INVESTMENT MERITS Malaysia’s leading ICT distributor Domestic ICT sector continues to evolve and expand Wearables and IoT the next growth catalysts Net-cash balance sheet allows for future expansion Dividend policy of 30% gives commendable dividend yield Proxy to latest ICT trends with consistent dividend payout Undemanding PE valuation for a consumer stock

INVESTMENT VALUATION Based on share price (01.08.16): RM1.55; No. of Shares: 180.0 mil shares; NA per share: RM1.35; Cash per share as at 30.06.16: RM0.43

Market Capitalisation (RM’mil) 279.0

12-months trailing PE Ratio 10.5x

12-months trailing PE Ratio (net of cash) 7.6x

12-months trailing EV/EBITDA 5.8x

Price to Book Ratio 1.1x

FY2015 Dividend Yield# 3.9% #Based on 6.0 sen dividend declared in respect of FY15

(net of 5.0 sen special dividend declared in conjunction with 30th Anniversary)

1,2

50.7

1,2

76.1

1,3

26.3

1,5

91.1

1,9

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6.5% 6.7% 6.1%5.5% 5.2% 5.1%

FY11 FY12 FY13 FY14 FY15 1H16

Revenue (RM'mil) & Gross Margins (%)

30.1

29.9

26.9

29.4

32.5

11.4

2.4% 2.3% 2.0% 1.8% 1.7% 1.4%

FY11 FY12 FY13 FY14 FY15 1H16

PATMI (RM'mil) & Net Margins (%)

Orion S1 Orion V1