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Joelton
Supreme |
21-Aug-2026 11:30
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PhillipCapital&rsquo s Chew maintains &lsquo buy&rsquo call on TeleChoice following recent 1HFY2026 results Paul Chew of PhillipCapital has maintained his &ldquo buy&rdquo call on TeleChoice International (SGX:T41) as its recent 1HFY2026 resulted ended June 30 exceeded his expectations. &ldquo Revenue and PATMI were 52% and 59% respectively of our FY2026 forecast with PATMI spiked up 87% y-o-y to $4.9 million,&rdquo states Chew in his Aug 20 report. From Chew&rsquo s perspective, the positive takeaway from TeleChoice&rsquo s 1HYF2026 results was the strong momentum in its Personal Communications Solutions (PCS) division, which saw a revenue growth of 25% y-o-y to $205 million while profit before tax (PBT) jumped 140% y-o-y to $6.1 million. &ldquo This was driven by U Mobile' s growth in mobile subscribers and handset demand is further boosted by promotions and handset subsidies, as more consumers opt for postpaid plans rather than prepaid plans,&rdquo Chew elaborates. Chew believes that the momentum for the PCS division is intact as U Mobile aggressively looks to capture market share with its newly standalone 5G infrastructure. &ldquo Growth will eventually hit a steady state in line with Malaysia&rsquo s more mature mobile growth rate. U Mobile only reached 83% population coverage in 5G in March. The more aggressive targeting of nationwide market share could have only started in 2Q2026, as coverage is only now widely available,&rdquo he adds. On the other hand, while there was no update on the data centre project in Malaysia, Chew believes that digital infrastructure and data centres remain key to support TeleChoice&rsquo s next phase of growth. As such, Chew is maintaining his FY2026 PATMI forecast with an unchanged target price of 33 cents, which is based on FY2026 P/E ratio of 18 times, in line with the system integration sector. As of 3.37pm, shares of TeleChoice were unchanged at 23.5 cents. |
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Joelton
Supreme |
14-Aug-2026 09:38
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TeleChoice&rsquo s 1HFY2026 earnings surged 87.1% y-o-y to $4.9 mil TeleChoice (SGX:T41) has reported profit attributable to equity holders worth $4.9 million in 1HFY2026, ended June 30, up 87.1% y-o-y. Revenue in the same period grew 22.7% y-o-y to $296.6 million, with the personal communication solutions services (PCS) segment being the largest revenue contributor. The PCS segment saw a revenue gain of 25.3% y-o-y to $205.2 million. Profit before tax jumped nearly 140% y-o-y to $6.2 million, driven by higher revenue from the 4PL fulfilment and managed services contract with U Mobile in Malaysia. However, this was partially offset by losses in Singapore arising from retail operations. While the info-communication technology services (ICT) saw a revenue growth of 14.8% y-o-y to $54.1 million, profit before tax declined 5.3% y-o-y to $600,000 as the higher gross profit was partially offset by higher operating expenses. TeleChoice&rsquo s network engineering services (NES) segment witnessed a revenue growth of 20.6% y-o-y to $37.3 million. But, profit before tax was down 11.5% y-o-y to just $300,000, mainly attributable to its Indonesian operations. As at June 30, TeleChoice&rsquo s total assets stood at $229.5 million with net asset value per share (NAV) improved to 9.44 cents from 9.06 cents as at Dec 31, 2025. &ldquo Our PCS, ICT and NES divisions each play a role across the technology and connectivity value chain. This spans devices and connectivity, enterprise technology, network infrastructure and data centre-related solutions. This breadth of capabilities positions us to participate in opportunities arising from digitalisation, AI adoption and investments in digital infrastructure in the region,&rdquo says Pauline Wong, president and CEO of TeleChoice. Shares of TeleChoice closed 0.5 cents higher, or up 2.08% at 24.5 cents on Aug 13. |
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Joelton
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25-Jul-2026 14:11
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TeleChoice embarks on strategic drive for sustainable growth Pauline Wong&rsquo s 27-year career with TeleChoice International (SGX:T41) closely mirrors the transformation of the local telecommunications industry. She first joined Tele Choice in December 1999 as an operations manager, thinking the industry was &ldquo recession-proof&rdquo because demand for mobile handsets, which the company distributes, was steadily growing even during economic downturns. Back then, the standard was known as 2G, or second-generation, mobile networks. Subsequent generations would steadily follow, bringing both upheaval and opportunity for the industry, with the latter especially pronounced in the past decade. Mobile operators, at the core of the industry, found it costly to upgrade to new network generations, and price competition set in, limiting their ability to generate fat margins. Along with newer technologies such as AI and more sophisticated business models and applications, the industry has become more complex. According to Wong, president and CEO of TeleChoice, the pressure was felt keenly by downstream players like TeleChoice, too. &ldquo From dealing with just consumers when we first started until today, where we need to add in the enterprise layer and ensure the interconnectivity between the stacks increases, this has resulted in significant challenges and we have to ensure that the decision we made today can be future-proof,&rdquo Wong says. While TeleChoice has endured tough times, it has shown signs of a turnaround in recent times. After recording losses across FY2021&ndash FY2023, it turned a profit of $4.2 million in FY2024 and $ 6.6 million the following year. With the turnaround, TeleChoice resumed a dividend payout of 0.6 cents per share in FY2024 and further increased it to 2 cents per share in FY2025. Wong could vividly recall the &ldquo welcome gift&rdquo she received at her appointment in October 2023. Less than two months later, the company was included in the Singapore Exchange (SGX) watchlist after three consecutive years of pre-tax losses and an average market capitalisation of less than $40 million over the last six months. &ldquo Fortunately, we exited the watchlist last July. I believe that this was done through the sheer strength and resilience of the entire team. Apart from that, all three of our business divisions showed improvement it is not just about one star player,&rdquo Wong elaborates. The watchlist, a deeply unpopular mechanism, was officially abolished back in October last year. Over the past year, driven by improving numbers, TeleChoice&rsquo s share price has gained close to 40%, reaching 24 cents on July 17, translating to a market capitalisation of around $109 million. In May, Paul Chew of PhillipCapital, the only analyst with active coverage of this counter, maintained his &ldquo buy&rdquo call on Tele Choice after its 1QFY2026 results came in within expectations. Citing the recent re-rating of SGX-listed proxies in the system integration sectors, Chew has applied a higher valuation multiple and has thus raised his target price to 33 cents from 27.5 cents. This marks his second price target increase in two months after he raised it from 21.5 cents in March. Sustainable growth If TeleChoice&rsquo s ultimate controlling shareholder were better known, market observers might find it somewhat surprising that it was on the watchlist, given the assumed backing. As indicated in its latest annual report, ST Telemedia, a wholly owned unit of Temasek Holdings, owns a 50.4% stake in TeleChoice. ST Telemedia is better known for its controlling stake in StarHub and a vast data centre operation, STT GDC, which is being sold to KKR and Singapore Telecommunications. It also invests in another data centre business, GDS. According to Wong, having this shareholder goes beyond capital support. What is of greater value is the kind of corporate structure and, hence, the strong corporate governance that is instilled. &ldquo If you look at the area that ST Telemedia is in, it requires strong execution, discipline and foresight. Therefore, they were able to provide us with the strategic perspective, macro views and insights that other companies might not be able to get out there,&rdquo Wong adds. Back in FY2024, TeleChoice announced that it launched a strategic roadmap called &ldquo Renew, Rebuild and Transform&rdquo . Wong claims that while it was easy for her and her team to fix the balance sheet and return the company to profitability, she wants to ensure sustainable growth. &ldquo When the company was on the watchlist, we lost credibility almost all stakeholders lacked confidence, especially our employees, shareholders and partners. Therefore, there is a need to renew the belief and trust. Also, we need to rebuild our confidence in the market and our capabilities. At the end of the day, it can lead to transformation, which is something I shared with the board consistently and also internally,&rdquo Wong shares. &ldquo FY2024 was the year of reset as TeleChoice turned profitable after years of losses. The numbers accelerated in FY2025 and, more importantly, the company exited the watchlist. The exit renewed the confidence within Tele Choice,&rdquo Wong adds. Wong shares that TeleChoice did not come to where it is today just by sheer luck. &ldquo Since my first day with TeleChoice 27 years ago till now, I have seen a lot of our competitors being obsolete and falling out of the industry and that is because they did not do anything about it. We stayed close to consumers and it gave us the ground and masses to move into the infocommunications technology (ICT) space,&rdquo Wong elaborates. Three key pillars Today, TeleChoice has three business divisions: personal communications solutions (PCS), ICT and network engineering services (NES). The PCS division provides consumer fulfilment and managed services, offering retail, e-commerce, distribution, and supply chain solutions for mobile devices, wearables, and smart lifestyle products. In contrast, the ICT division is a regional provider of information and communications technology solutions, supporting enterprise digital transformation through technology infrastructure, applications and communications services. Lastly, the NES division provides network engineering services and specialised telecommunications solutions to fixed and mobile operators across the Asia Pacific region. &ldquo These three businesses build on one another and are interlinked. This will naturally lead us towards the transformation of Tele Choice, as we will be entering a space we are familiar with, especially in digital infrastructure and data centres. This will help us pivot towards the next layer of sustainable growth. More importantly, this will allow us to do it in a very logical and coherent manner,&rdquo says Wong. Its PCS division is equally exposed in both Singapore and Malaysia. &ldquo Singapore is our home ground and where we are listed. It is also a place where we have grown most of our capabilities and strategic relationships with Samsung, Huawei, ZTE, Honor and more,&rdquo Wong explains. However, meaningful new growth for this business came about in Malaysia. Back in Feb 2024, TeleChoice secured a $500 million fourth-party logistics (4PL) managed services contract from Malaysia&rsquo s mobile operator, U Mobile, spanning three years and providing a comprehensive suite of supply chain management solutions. &ldquo This strategic contract is very significant and a growth engine for us. Therefore, for the PCS business, both the Singapore and Malaysia markets are worthy of our attention and resources as both can be further developed and grown,&rdquo says Wong. With U Mobile recently launching its 5G network in Malaysia, Wong says it will have a positive impact not only on the PCS division but also on the NES division. &ldquo With the launch of the new network, there will be a refresh of all consumer devices to be able to use the 5G network. Apart from that, the NES division will come in with power installations, building coverage, test drives, and everything. Therefore, there will be a spurt of activities in Malaysia,&rdquo Wong explains. The ICT division incurred losses for four consecutive years (FY2021&ndash FY2024) before achieving a turnaround in FY2025 and 1QFY2026. Wong credited the turnaround to the team. &ldquo Previously, we undertook a holistic review at our ICT division and wondered why we could not make a profit given that we serve the finance, healthcare, government sector and even take on critical infrastructure projects. That is when we realised we could not serve everybody and decided to streamline our product offering. There are lots of opportunities, but not every opportunity is worth pursuing as resources are limited,&rdquo Wong explains. As such, Wong now wants to pursue projects that are quality wins for the ICT division. &ldquo That means the projects must have strategic value and the clients can work with us on a long-term basis. If you look at recent years, some of our wins have included multi-year projects. We do not just go for the simple transactional kind of deals,&rdquo Wong states. The NES division, meanwhile, relies heavily on partnerships and strategic alliances with Huawei, ZTE and more, according to Wong. &ldquo As such, we have entered into frame relationships with our partners and we are hopeful that this will help us to grow in the long term,&rdquo says Wong. While most of the earnings from the NES division are derived from Indonesia, Wong is unfazed by the recent depreciation of the Indonesian rupiah. &ldquo There is always a cost to hedging the forex fluctuations. Even with the recent depreciation of the rupiah, our NES division was still able to hold up and this reflects the fact that the business has grown a lot and is how we can let the division be sustainable,&rdquo Wong explains. In the latest 1QFY2026 business update, the NES division recorded a 31% y-o-y increase in profit before tax to $170,000, while the ICT division saw a 20% y-o-y increase to $60,000 in profit before tax. TeleChoice&rsquo s main earnings driver, the PCS division, saw the strongest gain of 87% y-o-y to $2.09 million in profit before tax in the same period. Data centre projects To ride the hot AI trend and digital infrastructure developments, TeleChoice, together with its consortium partners, announced on March 27 that it has submitted a proposal for a design-and-build data centre project in Malaysia and that the consortium has been shortlisted in the tender process. TeleChoice pointed out that if the consortium is successful, it will finalise the scope and terms of its participation, including capital commitments and financing arrangements. It will also carefully consider the associated risks and returns before entering into any binding agreements. &ldquo I would love to share more details on this particular data centre project, but it is highly sensitive as we are now in the tender process. But what I can say is that this project is large-scale and will change the risk profile of TeleChoice,&rdquo Wong adds. Regardless of the tender&rsquo s outcome, Wong shares that TeleChoice has already been involved in many data centre-related projects. &ldquo Being pre-qualified and now in the later stage of the tender has lent credibility to us. Regardless of the tender result, I think Tele Choice&rsquo s trajectory and growth are firmly in this space. Our ongoing projects are proceeding as usual,&rdquo Wong claims. Circling back to the tender, Wong mentioned that different parties within the consortium brought about different capabilities and skill sets to the table. &ldquo We brought about a fresh perspective in terms of discipline and corporate governance. Nonetheless, this tender process is like the World Cup, where we enter the qualifying rounds and the semi-final rounds. Whether we win the World Cup (tender) or not, that&rsquo s a different story. At least we participated despite being served a yellow card (entry into SGX watchlist) much earlier on,&rdquo Wong elaborates. Assuming the consortium wins the bid for the data centre project, financing will be a key focus. &ldquo For TeleChoice, one of the easiest options is to go back to our parent (ST Telemedia) for the money. However, we are also exploring other financing options and we will see which one makes the most financial and economic sense,&rdquo Wong adds. For now, Wong is fully focused on winning the data centre project tender for Tele Choice. Cost management and share buybacks In the current inflationary environment, companies are keeping a close eye on operational costs. Wong says that no company out there can keep cutting operating costs to grow in the long run. &ldquo Rather than thinking of it as a cost-cutting initiative, we like to think of it as financial and operational discipline,&rdquo she states. &ldquo No doubt we have got to spend, but the question is where do we spend it? We have limited resources on hand, so which projects do we go for? Do we take on complex projects even if the margins might not be there, or does adding complexity increase our margins? These are the things we consider at Tele Choice, and we are much more disciplined as a company in capital allocation and budgeting. We look at things from a very macro perspective,&rdquo says Wong. She adds that TeleChoice&rsquo s growth trajectory is strong. &ldquo We are on firm grounds. The question now is how we ensure that we invest in the right pockets so that our earnings profile can be in a sustainable and disciplined manner,&rdquo Wong claims. Meanwhile, TeleChoice has been active in the market through share buyback transactions. Since the share buyback mandate commenced on April 28, the company has conducted seven transactions the latest was on June 25, when it bought back 10,000 shares at 25 cents each. On a cumulative basis, since the start of the mandate, the company has bought back 600,800 shares. While conducting a share buyback can reflect the view that shares are undervalued, for now, TeleChoice indicated that the treasury shares accumulated from the buybacks are for the employees&rsquo share scheme and the payment of directors&rsquo fees. On June 3, the company transferred 2.032 million treasury shares, worth almost $500,000, to fulfil the share awards for directors&rsquo fees and the employees&rsquo share scheme. Long-term plans Looking ahead, Wong says that TeleChoice&rsquo s growth strategies will largely focus on the three existing business divisions. &ldquo On top of that, new growth traction for the company will come from areas such as critical infrastructure, digital ecosystem and data centre space. For the PCS division, we will continue to focus on the consumer front and growing in both the Singapore and Malaysia markets,&rdquo Wong shares. For TeleChoice&rsquo s ICT division, which is now primarily focused on Singapore, Wong wants to ensure that every project win ahead builds on the existing base and capabilities. She believes that TeleChoice is very adaptable to the market needs here in Singapore. Once the division has gained a strong foothold, she could consider allowing it to venture into other countries. For the NES division, Wong shares that it will continue to focus on 5G-related engineering services in Singapore, Malaysia and Indonesia, as well as data centre works. &ldquo The NES division is involved in a lot of structured cabling works, and that is what is required in most of the data centres out there. In fact, both our ICT and NCS divisions are already working on data centres, and we are now considering moving up the value chain. Nonetheless, we want to do it in a very coherent and deliberate manner,&rdquo she says. |
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Joelton
Supreme |
25-May-2026 10:42
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PhillipCapital' s Chew raises target price for TeleChoice second time in two months
Paul Chew of PhillipCapital has kept his " buy" call on TeleChoice International after its 1QFY2026 results that were within expectations.
Now, citing the recent re-rating of SGX-listed proxies in the system integration sectors, Chew has applied a higher valuation multiple and has thus raised his target price to 33 cents from 27.5 cents. This marks his second price target increase in two months after he raised it from 21.5 cents in March. For its 1QFY2026, TeleChoice reported profit before tax of $2.3 million, an increase of 78% y-o-y, driven mainly by a big jump in its business of managing logistics of mobile devices on behalf of its key customer in Malaysia, U-Mobile, which won over more subscribers, which led to a bigger volume of mobile devices in demand. However, in Singapore, TeleChoice' s mobile retail business suffered losses because of longer replacement cycles. On the other hand, TeleChoice' s other business segment, ICT, is barely profitable in the quarter with profit before tax of just $60,000, up just $10,000 from the year-earlier 1QFY2025. The company is focused on the rollout of digital infrastructure, namely, storage solutions, and plans to move toward AI solutions. " The sales cycle is longer for such projects," says Chew. This current year, the mobile devices segment is seen to remain the main growth driver. TeleChoice' s contract with U-Mobile has been extended for another year and Chew expects further extension upon further negotiations. The company has another business segment in network installation and Chew notes that the company' s entry into data centre coolant installations in Indonesia is another area of growth. In what might be another significant growth driver, TeleChoice announced in March it was participating in a tender to design and build a data centre project in Malaysia. The tender results will be known within months. " Award of the Malaysia design-and-build data centre project will provide Telechoice with a significant pivot into a new, faster-growth segment," says Chew. For now, he has kept his FY2026 earnings estimates but has raised his valuation multiple from 15 x to 18x FY2026 earnings, in line with the recent re-rating of SGX-listed proxies in the system integration sectors. Chew expects stable growth for the mobile devices segment but warns that a weak rupiah will weigh on growth for the network engineering segment, while the ICT segment is still seeking new growth verticals amid a competitive environment. In another positive aspect, Chew observes that Telechoice has been undertaking share buybacks as high as 26.38 cents. TeleChoice International shares closed at 25 cents on May 23, down 1.96% for the day but up 47.06%. |
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tofudidi
Supreme |
16-Apr-2026 10:08
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share buyback @ 210. should cross 30c next 
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SmallSmall
Supreme |
16-Apr-2026 10:03
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Uncharted liao $0.24 +$0.02
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SmallSmall
Supreme |
13-Apr-2026 16:21
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This one attempting to break newer high....
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Joelton ( Date: 18-Mar-2026 09:54) Posted:
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PhillipCapital' s Chew raises target price for TeleChoice to 27.5 cents on growth prospects of mobile devices logistics
TeleChoice International has reported FY2025 earnings inline with the expectations of Paul Chew of PhillipCapital. However, with growth momentum in its main mobile device distribution segment - named personal communication solutions, or PCS, and as it is managing to turn around its smaller managed services and network buildout segments, Chew has raised his target price for from 21.5 cents to 27.5 cents.
In the most recent year ended Dec 2025, Telechoice' s revenue gained 27% y-o-y to $276 million, driven largely by the logistics management business the company undertakes for Malaysian operator U-Mobile. Adjusted patmi in the same period was up 20% y-o-y to $4.4 million, due to lumpy inventory provisioning.
To signal its appreciation for shareholders, TeleChoice plans to pay a final dividend of 0.45 cent, up from just 0.125 cent paid for the preceding FY2024.
Specifically, revenue from the business of handling devices logistics for key customer U-Mobile jumped 42% y-o-y to $200 million, driven by the telco' s growth in subscriber numbers and also higher postpaid plans. TeleChoice also increased outlets, widened the range of phones and introduced more accessories, notes Chew.
On the other hand, Telechoice got to make higher inventory provisions. Chew notes that there was a spike in inventory write-down or a $2.5 million increase to $3.8 million. " We believe it is a general inventory provisioning rather than actual obsolescence," he reasons.
According to Chew, the PCS segment will continue to be a key growth driver, riding on U Mobile' s aim to increase market share with the rollout of its 5G network, which implies more business for TeleChoice.
Also, its network engineering services segment will see growth with new managed services in Indonesia and the installation of network equipment in Malaysia.
A third business segment, ICT, or info-communication technology, is " recovering" as TeleChoice goes after more projects in healthcare and financial services, he adds.
For the current FY2026, Chew has raised his patmi forecast by 13% to $8.3 million, and by applying the same 15x PE, in line with other SGX-listed proxies in the system integration and software sectors, derive the higher target price of 27.5 cents.
Down the road, the company is mulling further expansion into new, higher-growth segments within the digital infrastructure, including data centres, says Chew.
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7ocean ( Date: 03-Oct-2025 09:17) Posted:
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Joelton ( Date: 30-Sep-2025 11:41) Posted:
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PhillipCapital initiates coverage on TeleChoice with &lsquo buy&rsquo at 21.5 cents target price
Analyst Paul Chew of PhillipCapital has initiated coverage on communications player TeleChoice International (TeleChoice) with a &ldquo buy&rdquo call and target price of 21.5 cents, on expectations the company, having recently turned around, is set to maintain steady earnings growth.
The group is 50.4% owned by ST Telemedia, a Temasek wholly-owned company focused on communications and media, data centres, and infrastructure. After four years of losses, TeleChoice turned around with an adjusted net profit of $3.5 million in the FY2025, while 1HFY2025 earnings swung from a net loss of $600,000 to an adjusted profit after tax and minority interests (patmi) of $2.3 million.
Chew notes that the group&rsquo s personal communications solutions (PCS) business segment, which made up about 73% of its profit before tax (PBT) in the 1HFY2025, operates Malaysia&rsquo s Planet Telecom' s retail chain, manages StarHub Platinum Shops in Singapore and is also a distributor for its prepaid card business.
TeleChoice is also the full-service distribution, brand marketing, and retail management of Chinese mobile phone player Honor' s products in Singapore.
&ldquo TeleChoice distributes Honor and Samsung handsets. However, for Honor, it includes managed services for brand activities and channel marketing. Pure distribution of phones has lower margins,&rdquo he writes.
In Malaysia, the PCS segment secured a $500 million contract for Fourth-Party Logistics (4PL) services, including procurement, retail management, fulfillment and holistic supply chain solutions, with U Mobile, the third-largest mobile operator in the country.
The group&rsquo s 4PL contract has a base fee with incentives, with fees paid for the procurement, warehousing, financing, delivery and returns of the handsets to end customers and distributors. It covers major phone brands such as Apple, Samsung, Xiaomi, Honor, and Vivo.
Chew notes that although there are no margins earned from the handsets, TeleChoice also manages the majority of U Mobile outlets, where it receives a fee for providing services to customers.
The contract is for an initial term of two years, which could be extended for an additional year. One key risk in the 4PL contract noted by the analyst is inventory obsolescence.
Next, TeleChoice&rsquo s info-communications technology (ICT) segment which specialises in consultancy, system integration, and comprehensive ICT offerings across digital infrastructure, tech and apps services, and communications made up 17% of PBT in the 1HFY2025.
The group&rsquo s ICT projects in Singapore include storage and server refreshes for enterprises, campus management infrastructure, unified communications and contact centres. Major partners in the space include Avaya, Genesys, Oracle, Huawei, Supermicro and IBM.
Chew writes: &ldquo Revenue is evenly split between hardware, maintenance, and projects. AI and automation projects will be the new growth area for the ICT sector.&rdquo
Finally, the group&rsquo s network engineering services (NES) segment takes up the smallest share of PBT at 10%
In Indonesia, Malaysia and Singapore, TeleChoice builds and manages telecommunications networks, providing a comprehensive suite of specialised products and solutions to address the network infrastructure needs of fixed and mobile operators.
In Indonesia, it supports the build-out of 5G data centres and the expansion of coverage, which covers in-building coverage, tower installation, the testing of blind spots and general network optimisation.
With this, Chew sees that the segment&rsquo s headcount strength has doubled to 4,000. He adds that a new area for NES is in the powertrain and structured cabling of data centres in Indonesia and 5G infrastructure installation in Malaysia, where he names Huawei, Vertiv, Delta, and Schneider as significant power supply solutions companies.
Overall, about 64% of TeleChoice&rsquo s revenue is generated from its PCS segment, with 93% of this being hardware-related. The other divisions, ICT and NES, contribute 22% and 14% respectively to group revenue.
By geography, Singapore accounts for 56% of revenue, followed by Malaysia at 34% and Indonesia at 10%. Chew notes that the 60% increase in FY2o24 revenue was primarily due to a 116% y-o-y surge in PCS revenue, while the ICT and NES segments grew at a more modest 12% and 7% respectively.
On the group&rsquo s balance sheet, Chew notes that a large proportion of TeleChoice&rsquo s assets are in trade and other receivables at 46%, with the balance in inventories at 22% and cash at 19%.
He writes: &ldquo There is minimal need for fixed assets in the business. Trade and other receivables have doubled to $92 million in the FY2024, primarily due to the U Mobile contract for purchasing handphone supplies.&rdquo
Meanwhile, he adds that free cash flow has been &ldquo largely negative&rdquo . &ldquo The losses over the past 4 years have resulted in cumulative $23 million in negative free cash flow. Despite the return to profit in FY2024, working capital needs were negative due to a significant $53 million jump in trade receivables and $9 million rise in inventories. Part of the drawdown in working capital was offset by $35 million in trade payables,&rdquo writes Chew.
On his valuation, he sees that there are &ldquo no direct comparables&rdquo for TeleChoice. Chew&rsquo s 15 times price-to-earnings (P/E) ratio FY2025 valuation is based on SGX-listed proxies in system integration and software companies.
He concludes: &ldquo We expect TeleChoice to enjoy stable earnings growth from 4PL as handset demand rises from new U Mobile subscribers, increasing postpaid plans and expanding branch network. TeleChoice' s business model is fixed asset light with 17% return on equity (ROE). We think the ownership by ST Telemedia is an advantage for future growth opportunities.&rdquo
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TeleChoice&rsquo s Wong drives turnaround, bridges consumer and enterprise markets while aiming for watchlist exit
Shareholders of TeleChoice International were met with unwelcome news on the morning of Dec 5, 2023.
After four consecutive years of losses, the company had been placed on the Singapore Exchange&rsquo s (SGX) watchlist, risking delisting if certain requirements are not met within 36 months.
While not completely unexpected, confronting the situation was still a sobering experience for the then- fresh-faced CEO, Pauline Wong.
" Of course, there was an immediate sinking of the heart to say the least. I think it' s okay to feel lousy for one day, two, or even three days &mdash but after that, we had to snap out of it," says Wong in an interview with The Edge Singapore.
Wong took on her role in mid-October 2023, 24 years after joining TeleChoice as an operations manager in one of its business divisions.
" We received all sorts of emails after the announcement," she adds. One shareholder writes: " As a concerned shareholder, I am saddened that the company continues to report losses. Will we see an improvement soon?"
" With the company placed on the SGX watchlist, will there be a change, and can we expect a return to dividends in the foreseeable future?" writes another.
The infocomm product and service provider&rsquo s four-year profit drought stems from the severe impact of the Covid-19 pandemic, as movement controls and travel restrictions curbed operations in Singapore and the region.
For FY2020 ended Dec 31, 2020, TeleChoice reported a loss of $5.6 million, with revenue falling 31.9% y-o-y to $213.5 million, leading to a loss per share of 1.23 cents from an earnings per share (EPS) of 1.19 cents in FY2019.
Losses of $11.5 million came in for FY2023, which Wong recognises as " a bloodshed year" .
Wong adds: " That to me and to us [the company] was ground zero. That was the year that marked the end of all losses."
Come FY2024, TeleChoice emerged out of the red with a return to profitability of $4.2 million, thanks to revenue surging by 59.8% to $380.4 million, resulting in an EPS of 0.89 cents.
The growth in revenue was driven by an improved performance in all of the company' s divisions.
&lsquo Robust and sustainable&rsquo
If FY2024 was the year of reset, FY2025 will be the year of execution for the company, says Wong.
The CEO has set her eyes on a " robust and sustainable" business model, with an aim of growing its business divisions and delivering shareholder returns.
Today, TeleChoice operates through three different segments: personal communications solutions (PCS), infocomm and technology (ICT) and network engineering services (NES).
The PCS segment is the company' s original business, or as Wong puts it, the " star performer" , mainly involved in the distribution of mobile devices and related consumer tech.
Revenue from the segment takes the lion' s share of group revenue, which rose 115.9% y-o-y to $241.4 million in FY2024, while PBT grew to $6.6 million.
In Singapore, TeleChoice is the largest distributor of Samsung devices and the brand representative of Chinese smart device maker, Honor.
" We do the marketing, we do channel fulfilment, even things like getting type approvals in the beginning, contacting operators and getting them to onboard these models&ndash this is all done by us, and these are tasks that are usually done by the brand [Honor] itself," says Wong.
Honor is a spin-off from Huawei, for which TeleChoice had also served as distributor prior to former Huawei CFO Meng Wanzhou' s 2022 fraud charges in the US, after which the brand' s presence in Singapore was significantly reduced, says the CEO.
Wong attributes the winning of the distribution contract to the company' s good relations with the team at Honor, who were largely made up of familiar faces from Huawei.
Together, Samsung and Honor make up around half of the PCS segment' s FY2024 $241.4 million revenue.
In Malaysia, TeleChoice has a $500 million four-party logistics contract with major telecommunications provider, U Mobile.
Covering device procurement, inventory management, customer experience, as well as warehousing, storage and distribution, the contract covers three years beginning from February 2024.
" Now we serve all over Malaysia, including east and west Malaysia, at a total of 1,002 touch points. We have been a trusted partner of U Mobile since 2012," says Wong.
Both TeleChoice and U Mobile share the same largest shareholder: Singapore Technologies Telemedia, a subsidiary of Temasek Holdings.
While the PCS business remained profitable even during the troughs of the pandemic, the ICT business was TeleChoice' s only loss-making division in the recent FY2024.
In the period, the ICT business narrowed its losses to $1.2 million from $7.9 million in the same period last year, after achieving a 12% revenue boost to $85.7 million and significantly reducing operating losses to $1.2 million.
The improvement follows the segment' s restructuring and streamlining in FY2023, where its voice and internet protocol (IP) telephony services business was disposed of and the remaining segment was reorganised into three divisions: digital infrastructure, tech and apps services and lastly, communications.
Here, TeleChoice manages storage servers, cloud services and unified communications for corporations.
Wong says that diversification is necessary to minimise risk in today' s unpredictable climate, even more so post-Covid-19.
" How do we differentiate ourselves in the ICT world? Simply put, we cannot be everything we cannot be the biggest. There' s the likes of NCS, there' s the likes of ST Engineering. We are not competing at that level. So how do we? We have to go deep in our offerings, we can' t go wide," she adds.
With this in mind, TeleChoice clinched wins with " major" players in the banking, healthcare, gaming and hospitality sectors.
" The AI wave is definitely something that will change the ball game in the ICT space," adds Wong.
TeleChoice' s last segment, NES, entails end-to-end solutions for radio and transmission network planning, optimisation, implementation, maintenance, as well as project management for mobile operators and tower owners.
It also covers offerings such as ducting, cabling, accessories, distribution frames, cross-connects, active monitoring systems, power supply and backup solutions for optimising data centres.
Partners in the segment include Huawei, China Telecom Europe (CTE) and Nokia, as these are vendors that deploy 5G networks in their offerings, says Wong.
In this space, the CEO sees Indonesia as a " stronghold" , where TeleChoice employs some 3,500 employees who work with telecom operators and data centres.
The company entered the market in 2023 with the acquisition of NexWave Technologies.
Wong says: " The market is a stronghold because of the country' s sheer size, and Indonesia is the only country where, besides working with operators, we have also worked with data centres."
The CEO eyes more wins in data centres, to " move up the value chain" and tap into the shift from hardware to cloud.
In the FY2024, revenue in the NES business increased 7.5% y-o-y to $53.3 million, resulting in a PBT of $700,000.
Alongside revenue diversification of the company' s business segments, geographical diversification is another one of the " key ways" of managing today' s unpredictability, says Wong.
In the FY2023, 80% of TeleChoice' s revenue was derived from Singapore.
Come the FY2024, 56% came from the city-state, with the remaining split between Malaysia and Indonesia at 34% and 10% respectively.
Growing confidence
Ultimately, Wong wants to create value for shareholders.
She sees her responsibility as a CEO extending beyond the employees under her, but also to shareholders of TeleChoice.
" We have shareholders that have been with us for the longest, longest time. I remember at my very first AGM, I saw shareholders that were very old and they rely on our dividends as pocket money of sorts. So the experience was quite humbling," says Wong.
With this in mind, TeleChoice announced a new dividend policy for FY2024, committing to distribute at least 30% of net profit after tax.
The CEO adds: " This signals our confidence. After four years of losses, if we were not confident that we have already re-built our foundation and rebounded, if this was a flash in the pan, then we would not have been so bold as to come up with a dividend policy."
She notes that TeleChoice has " always been a very good dividend play" .
Since listing at 29 cents in 2004, the company has declared 31 cents in total dividends.
She also says that 96% of total earnings have been paid out to shareholders over the years.
" I don' t think many companies can say that." adds Wong.
The clearest signal of the company' s turnaround has come from the market.
The company' s share price has also risen some 87.5% ytd to close at 15 cents on July 16.
Such is the confidence of the CEO in TeleChoice' s turnaround that she has submitted an official request to SGX to be taken off the watchlist.
She notes that TeleChoice' s market value of around $70 million is always way above the threshold of $40 million.
" We are clearly rebuilding for sustainable and long-term growth."
In an unrated March 4 report by Maybank Securities, analyst Hussaini Saifee acknowledges the company' s return to profitability in FY2024 and dividend resumption of 0.125 cents per share.
He writes: " Looking ahead, TeleChoice expects continuous revenue growth across all segments, despite an uncertain economic environment."
Although it remains to be seen how the company executes its five-year transformation plan, culminating in FY2029' s " year of great expectations" , its first quarter profit before tax of $1.30 million from the 1QFY2023' s $200,000 signals growth in the right direction.
If the recent emails from pleased shareholders are anything to go by, TeleChoice is on the right track.
One writes: " I just had a look at the latest results. TeleChoice' s profit is an encouraging step forward. Great job, thumbs up!"
" Thanks for the effort, the improvements this quarter are heading in the right direction. Keep it up!" writes another.
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MrBear12 ( Date: 05-May-2024 12:47) Posted:
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MrBear12 ( Date: 05-May-2024 12:44) Posted:
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KiLrOy ( Date: 18-May-2017 20:26) Posted:
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