The company is a leading technology service platform in the Asia-Pacific region and continues to provide stable returns to shareholders. The company has been deeply involved in IT distribution for more than 30 years. The company was founded in 1991 and listed in Hong Kong in 2002. It focuses on providing a full range of one-stop information services to improve operational efficiency, reduce transaction costs for partners, and promote the digital transformation of technology enterprises. The company's performance grew steadily, spanning the economic cycle. The recent revenue CAGR for 2016 to 2023 was about 6.3%. In the first half of 2024, the company achieved operating income of HK$40.1 billion, an increase of 17.8% over the previous year. The company values shareholder returns and actively gives back to investors. The company's ROE has been greater than 10% for 22 consecutive years since listing, and the ROE reached 11.7% in 2023. Since listing, repurchases and dividends have reached HK$3.3 billion. The company has maintained a 30% cash dividend for many years, and the cash dividend ratio rose to 40% in 2023.

Southeast Asia's economic growth has great potential, and the company continues to strengthen its Southeast Asian business to provide new impetus for subsequent performance growth. Southeast Asia's economy has grown rapidly in recent years, and it still has great potential for future development. According to the International Monetary Fund's forecast, the compound annual GDP growth rate of Indonesia, Cambodia, Myanmar, Thailand, the Philippines, Malaysia, Laos and Singapore is expected to be 7.68%/8.76%/6.05%/4.29%/8.51%/7.16%/-6.38%/4.8%, respectively. Southeast Asia has ushered in a wave of IT infrastructure construction, and the ICT industry is growing rapidly. China and Southeast Asia have resumed capital expenditure investment in the ICT sector. The compound growth rate is expected to exceed 5% from 2023 to 2028. The company grasps the development trend in Southeast Asia and helps domestic brands go overseas. The company's share of revenue in Southeast Asia rose from 21.4% in 2019 to 23.8% in 2023, while its share of profit increased from 29.1% in 2019 to 46.2%. In the first half of 2024, Southeast Asia accounted for 34.1% of revenue and 45.9% of net profit. The share is expected to continue to increase in the future, driving the company's overall performance growth.

Benefiting from the wave of switching brought about by the launch of AI terminals, the global digital transformation brought growth impetus to the IT distribution business, and the IT distribution demand side picked up. IDC estimates that China's digital transformation spending is expected to reach 733 billion US dollars in 2028, accounting for about 16.7% of the world. The compound growth rate is expected to be about 15.6% from 2023 to 2028, which is higher than the overall global growth rate of digital transformation. IT distribution sells a lot with small profits. Channel construction, financial strength and operational efficiency are one of the key factors in its continuous development and market competitiveness.

According to the company's official website data, the company is spread across 9 countries in the Asia-Pacific region, covering 87 branches, about 0.05 million downstream channel partners, and serving 1.9 billion people. The company has plenty of cash on hand. As of June 30, 2024, the company had HK$3.7 billion in cash and cash equivalents, a net debt ratio of 17%, and sufficient solvency.

Profit prediction and rating: The company is a leading technology service platform in the Asia-Pacific region. It also has high dividends and overseas concepts. Traditional IT distribution benefits from the AI wave, the digital transformation of enterprises, and demand is picking up. We expect the company to achieve revenue of HK$82.4/91.8/102.4 billion in 2024/2025/2026, with a year-on-year increase of 11.5%/11.4%/11.6%, and net profit to mother of HK$0.968/1.176/1.266 billion, respectively, up 4.9%/21.5%/7.6% year-on-year. We selected Shenzhou Digital, Xinjus, and Arrow Electronics, which also belong to the IT distribution industry, as comparable companies. The average PE in 2025 was 11X. The corresponding PE in 2025 was 6X, far below the industry average. It was covered for the first time, and a “buy” rating was given.

Risk warning: intensifying market competition, falling short of expectations in the Southeast Asian market growth, risk of choosing comparable companies across markets