ECS outlook improves on new IT product launches

Working capital management also shaping up.

In its latest Market Pulse update, OCBC noted that ECS managed to lower its net gearing ratio from 59.4% (as at end 2Q12) to 38.5% (as at end 2Q13) due to good working capital management.

"Looking ahead, we expect ECS to be a beneficiary of new product launches by major IT vendors such as Apple. We trim our FY13 and FY14 core PATMI forecasts by 6.2% and 3.9%, respectively," it said.

The outlook came as ECS disappointed with its most recent 2Q13 results. Revenue and PATMI rose 23.5% and 11.0% YoY to S$1,017.5m and S$9.0m, respectively, but after adjusting for forex and other exceptional items, OCBC estimates that core earnings declined 7.3% YoY from S$7.4m to S$6.9m, which was below the research firm's expectations.