DeClout Group CEO Vesmond Wong wants to offer a one-stop solution of IT asset recovery and independent maintenance services for MNCs. With him is ASVIDA Asia CEO Kow Ya (left) who oversees the Southeast Asia maintenance services market. Photo by Sim Kih
REFURBISHMENT and resale of used IT equipment is a mature industry in the US and Europe but it has yet to take off in Asia.
SGX Catalist-listed DeClout wants to be the first prime player in Asia for IT asset recovery and independent maintenance services --- using refurbished quality hardware.
“Pre-owned IT equipment is often less than a year old and works out to a savings of at least 30% to 40% for the end user,” said DeClout founder and CEO Vesmond Wong in an interview with NextInsight.
DeClout buys pre-owned hardware, tests it, and strips it down to its components. It subsequently assembles them according to customer requirements.
There's another key aspect of the maintenance service that DeClout offers.
Many companies use a myriad of quality brands, be it IBM, HP, Oracle Sun Systems, or Cisco. However original equipment makers do not directly provide maintenance for competing brands.
Here's where DeClout provides a useful one-stop solution to the big boys.
The cost-effectiveness of using pre-owned IT equipment has gained user acceptance and Mr Wong is hopeful of spinning this business segment off by the end of 2016.
In FY2013, DeClout’s IT asset recovery and independent maintenance services subsidiaries - Procurri LLC (based in the US) and ASVIDA Asia (based in Singapore) -- generated revenue of S$26.9 million or 37% of Group revenue.
DeClout wants to foray into China's market for IT asset recovery and maintenance services, where the market potential is high and the market is largely untapped.
It aims to raise S$10 million by the end of May to fund its globalisation plans.
A Hong Kong listing is ideal as it allows DeClout to retain a stake in the business and be close to China.
Nonetheless, Mr Wong is open to other spin-off alternatives.
To meet the listing criteria in Hong Kong, the spin-off company has to post revenue of at least HK$500 million (about S$80 million).
This means that from a base of S$26.9 million in FY2013, DeClout has to grow the segment's revenue at least 44% annually (CAGR) to S$80 million by FY2016.
Is such aggressive growth plausible?
Voyage Research analyst Liu Jinshu has forecasted that the Group will post net profit of S$4.6 million in FY2014, up 142% year-on-year.
In his report issued on 7 May, Mr Liu estimated DeClout’s intrinsic value at 35 cents, some 70% above its recent stock price of 20.5 cents.
Declout's stock price (22 cents) has gained 91% since early Nov last year. Bloomberg data
