Efficen may have bottomed

Efficient E-Solutions Bhd ('Efficen') is involved in the provision of integrated outsourcing solutions in data and document processing (DDP) to banks, stock-broking companies, insurance companies and telecommunications operators. DDP covers services ranging from data extraction, conversion, formatting of documents to data printing and the preparation of printed documents for distribution via post. The Company also provides electronic bill presentment services, which includes data capture, archival and retrieval, and electronic distribution.

Listed on the Mesdaq Board in January 2005, Efficen was transferred to the Main Board in October last year. The transfer to the Main Board would enhance the image of the company as it embarks on its overseas expansion. The first overseas foray is its investment in Hong Kong in the middle of last year.

Its recent financial results has been quite encouraging, albeit a slight decline in net profit in the last 2 quarters. Its turnover for the past 4 quarters increased by 16% when compared to the preceding 4 quarters, while net profit increased by 14%.



Efficen's financial position is satisfactory, with current ratio at 5.6 times & gearing ratio (borrowings to shareholders' funds) at a negligible 0.1 times.

Efficen (closed at RM0.105 yesterday) is now trading at a PE of 4.2 times (based on last 4 quarters' EPS of 2.5 sen) or at a Price to Book of 0.9 times (based on NTA per share of RM0.12). At these multiples, Efficen is deemed very attractive.

Efficen made a recent high of RM0.28 in December 2007. Since then, the share price has been dropping & it made a recent low of RM0.08 in October 2008. Efficen has a strong horizontal support at RM0.09. Recently, Efficen has surpassed its medium-term downtrend line. Further consolidation around the RM0.10 level is likely.


Chart: Efficen's monthly chart as at Jan 19, 2009 (source: Quickcharts)

Based on attractive valuation & mildly positive technical outlook, Efficen is a good stock for long-term investment.