Why I Like Efficient e-Solutions

Efficient, a business process outsourcing (BPO) services provider, is an under rated company by virtue of it doing unexciting stuff. Its BPO services include data and document processing, records management, and archival and retrieval of documents. In terms of market share, Efficient is one of the biggest players in the local data and document processing industry, dominating the banking, stockbroking and life insurance industries. The company is also involved in data and document processing (DDP) for Astro. Documents include credit card statements, bank statements and insurance policies.

Efficient controls around 70% of the market for DDP in Malaysia. Earnings are resilient as these documents have to be printed and sent even if there is an economic slowdown. Efficient, which was listed on Jan 10, 2005 on the Mesdaq market, was transferred to the Main Board on Oct 10 last year.

Recently, eight Malaysian companies are among the 200 small and medium-sized companies in the Asia Pacific that got into Forbes Asia's fifth annual "Best Under A Billion" list for 2009. The companies are Coastal Contracts (marine transportation), Efficient E-Solutions (information technology outsourcing), ETI Tech (batteries), Hai-O Enterprise (cosmetics), Kumpulan Fima (food processing), NTPM (paper products), Success Transformer (electrical manufacturing) and YNH Property (palm oil). According to Forbes Asia today, the winners were culled from over 25,000 publicly-listed companies with under US$1 billion in sales.

Four Malaysian companies - Coastal Contracts, Kumpulan Fima, NTPM and YNH Property - each recorded US$101 million in sales. For the others, Hai-O Enterprise registered US$122 million in sales, Success Transformer US$53 million, ETI Tech US$24 million and Efficient E-Solutions US$17 million.

Efficient operates a high free cash flow business with normal annual capex of approximately RM1m to RM2m. As at June 30, ’09, Efficient had RM15.6m in net cash and another RM8m in short-term investments.

Net Profit 12.1m (06), 15.1m (07), 15.8m (08), 17.3m (09 estd.)
EPS 09: 2.6 sen
Shares Issued: 658m

Cheah Swee Sin SB 20.2%
Cheah Chee Kong 15.2%
Kumpulan Sentiasa Cermerlang 13.1%
Asian New Century Capital 4.7%
Amanah Raya Small Cap Fund 3.74%
Beh Eng Par 3.05%
Abdul Latiff Abdullah 2.2%

It has now started to pay dividends as well. Not many companies make it out of Mesdaq alive, but Efficient is now on the Main Board. Fundamentals are fundamentals, if you look at the stock trades for the past two weeks, it has been bought up surreptitiously, probably by some funds. The comfort is the appearance of Kumpulan Sentiasa Cemerlang, which is a savvy long term investor. Looking at it I see no obstacle till it reaches 32 sen at least. Past that, valuations get a bit hard to stomach.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.


p/s photo: Ayano Washizu