CENSOF (FUNDAMENTAL ANALSIS)

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Company Profile

CENTURY SOFTWARE ANALYSIS on FY2014 annual report + taking in FY2014 Q1 result

Period	201406	201403	201312	201309	201306
Revenue	31,524	30,250	17,717	7,647	14,206
Gross Profit	22,959	20,184	6,656	4,568	4,503
PBT	6,716	4,284	(2,846)	1,349	768
Net Profit	5,015	2,972	(3,049)	1,230	737

SUMMARY

Profitability

·   CENSOF, earnings in FYE 31^st Mar 2014, took a beating as it recorded 57% decline in earnings despite FYE 31^st Mar 2014 is a 15 month reporting period. (But for a good reason refer to below quarter by quarter assessment.)

·         Scrutinizing CENSOF performance by quarter, reviewing the last 5 quarters, here are the observations :-

o   Last 2 quarters 201406 and 201403 revenue steadied at MYR30m threshold while profits at MYR5m and MYR2.9m respectively.

o   Quarter in 201312 recorded net loss of MYR3m was mainly due to one of cost of acquiring time engineering, now known as DNEXT, which cost CENSOF MYR5.3m, otherwise, CENSOF would have recorded 2.3m net earnings.

o   Disregard the MYR5.3m cost, CENSOF would have reported net earnings of MYR9.2m, just a fraction lower than FYE 31^st Dec 2012

o   Assuming CENSOF maintained 201406 performance, CENSOF FYE 31^st March 2015 estimated revenue and net earnings = MYR120m and MYR20m.

·         CENSOF profitability is expected to continue to grow (or at the minimum steadied at MYR30m revenue per quarter) for in 2014/2015 on several factors

o   CENSOF key clients are IRB, Ministry of finance, KL City Hall, Malaysian Palm Oil and SOCSO, (in short government agencies)

o   CENSOF as of to date 5^th Oct 2014, still owns over 39% (304m) of DNEXT shares, which is contributing to CENSOF earnings considerably refer to CENSOF 201403 and 201406 quarter reporting @ financial notes B1a (Group Performance review)        

o   GST theme, CENSOF is one of the approved GST software provider.

o   CENSOF stands to gain diversification into Oil and Gas via owning 39% of DNEXT

Liquidity

·         CENSOF, has high level of cash reserves, in 201406, cash and bank balance + fixed deposits = MYR65.4m

·         CENSOF current ratio is very comfortable at 2.1x.

·         Borrowings from bank (Short and Long term) is manageable at MYR112m

GOODWILL AND INTANGIBLE ASSETS

·         On negative aspect, CENSOF has over MYR62m intangible assets and goodwill arise from M&A.

INCOME STATEMENT

·         CENSOF Income lies in their core business and earnings from DNEXT.

·         CENSOF, gross profit margin

BALANCE SHEET

·         Balance sheet in 15 month FYE 2014 grew to MYR320m from MYR83m in FYE2012.

·         An injection of non-controlling interest of MYR62m and additional short + long term bank borrowings of MYR127m help fund the balance sheet expansion.
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   Research by KH WONG 

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