Results Note Analyst: Kevin Low

kevin@affinsecurities.com.my

Date: 1st June 2010

BCT Technology Berhad Price: RM0.05
1Q10 – Still in the red Market Capitalisation: RM6.7m
Board: Mesdaq
Sector:Technology
Stock Code:0130
Recommendation: Cease coverage
Index Component/Constituent: -

Key Stock Statistic

Share price chart
FYE Dec 2009 2010E
EPS (sen) -7.8 -1.5 1.20
P/E on EPS N/m N/m
1.00
Dividend/Share (sen) - -
NTA/Share (RM) 0.14 0.06 0.80
Book Value/Share (RM) 0.14 0.06
0.60
Issued Capital (m shares) 134.2
52-weeks Share Price Range 0.095 / 0.045 0.40
Major Shareholders (%)
Thomrose Holdings 20.3% 0.20

Per Share Data 0.00

FYE Dec 2008 2009 2010E 2011E 2012E May-07 Nov-07 May-08 Nov-08 May-09 Nov-09
Book Value (sen) 13.7 5.8 4.7 4.1 3.2 Source: Bloomberg

Cash Flow (sen) 0.1 (4.2) (4.9) (1.9) 5.0

Fig 1: Quarterly results highlights
Earnings (sen) (23.7) (7.8) (1.5) (0.7) (0.2)
FYE Dec QoQ YoY
Dividend (sen) - - - - - (RMm) 1Q09 4Q09 1Q10 % chg % chg
Payout Ratio - - - - - Revenue 3.7 1.1 1.3 14% -65%
(0.2) (0.6) (3.3) (6.8) (21.0) EBIT (0.7) (7.5) (0.8) -90% 5%
PER (x)
Net int inc / (exp) (0.0) (0.0) (0.0) -71% -53%
P/Cash Flow (x) 62.1 (1.2) (1.0) (2.6) 1.0
Exceptional Item - - - - -
P/Book Value (x) 0.4 0.9 1.1 1.2 1.6 Pretax Profit / (loss) (0.8) (7.5) (0.8) -90% 2%
Dividend Yield (%) - - - - - Tax - - - - -
ROE (%) (172.9) (134.0) (32.1) (17.7) (7.4) Net Profit (0.8) (7.5) (0.8) -90% 2%
EBIT Margin -19% -657% -58%
Net Gearing (x) 0.05 0.7 2.0 1.6 0.4
Pre-tax Margin -20% -662% -59%
Net-Margin -20% -662% -59%
P&L (RMm)
FYE Dec (RMm) 2008 2009 2010E 2011E 2012E
Revenue 5.4 7.2 17.8 20.5 22.5
Results Review & Earnings Outlook
EBITDA (7.7) (2.3) (0.1) 0.7 1.5
Dep. & Amort. (2.6) (1.9) (1.4) (1.5) (1.6) 1Q10 net loss of RM0.8 m – below expectations
Net int inc./(exp) (0.0) (0.5) (0.5) (0.2) (0.2) BCT reported a slightly wider 1Q10 net loss of
(21.6) (5.8) - - - RM0.767m (vs a net loss of RM0.75m for 1Q09) on the
Exceptional items
back of lower revenue of RM1.3m (-65% yoy). The
Pre-tax Profit (31.9) (10.5) (2.0) (1.0) (0.3) losses were larger-than-expected, given the still dismal
Taxation (0.0) - - - - revenue. Recall that the group had previously a
0.0% 0.0% 0.0% 0.0% 0.0% relatively larger revenue base contributed by orders for
Effective tax rate
its ASIC products and higher software sales. Revenue
Net Profit (31.9) (10.5) (2.0) (1.0) (0.3)
from its ASIC business has however discontinued given
Core net profit (10.3) (4.7) (2.0) (1.0) (0.3) the end of product life while new product launches have
EBITDA Margin -142% -31.9% -0.7% 3.2% 6.6% experienced delays.
Pre-tax Margin -587% -145.6% -11.4% -4.8% -1.4%
Net-Margin -587% -145.6% -11.4% -4.8% -1.4%

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1Q10 revenue up 14% qoq, but still in the red
On a sequential basis, 1Q10 revenue rose a 14% qoq
to RM1.29m probably due to higher revenue from
software sales. Net losses however narrowed to
RM0.8m from a wider net loss of RM7.5m in 4Q09. That
was nevertheless due to impairment charges and
allowance for doubtful debts.

Valuation & Recommendation

Ceasing coverage
Stock is lacking revenue drivers whilst financial
condition is deteriorating. Company is in a net debt
position of RM5.7m whilst operating cash flows are
negative. For this reason, combined with the stock’s low
trading liquidity, we are ceasing coverage on BCT. Our
previous SELL recommendation and SOP-derived
target price of RM0.02 are hence no longer applicable.

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 Equity Rating Structure and Definitions

BUY Total return is expected to exceed +15% over a 12-month period

TRADING BUY Total return is expected to exceed +15% over a 3-month period due to short-term positive development, but fundamentals are not strong
(TR BUY) enough to warrant a Buy call. This is to cater to investors who are willing to take on higher risks
ADD Total return is expected to be between 0% to +15% over a 12-month period
REDUCE Total return is expected to be between 0% to -15% over a 12-month period
TRADING SELL Total return is expected to exceed -15% over a 3-month period due to short-term negative development, but fundamentals are strong
(TR SELL) enough to avoid a Sell call. This is to cater to investors who are willing to take on higher risks
SELL Total return is expected to be below -15% over a 12-month period
NOT RATED Affin Investment Bank does not provide research coverage or rating for this company. Report is intended as information only and not as
a recommendation

OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months

NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months

UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months

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