Singapore-listed Procurri Corporation reported net profit of S$2.7 million for 1H2020, close to the S$2.6 million figure for 1H2019.

The 1H2020 bottomline would have turned a little red (net loss of S$0.9 million) if not for S$5.5 million of "other income", mainly from US government support related to Covid lockdowns.

Procurri stock 

32 c

52-week range

18.5 – 50 cts

Market cap

S$94 m

PE (ttm)

25

Dividend yield 

--

52-week 
return

1.6%

Shares outstanding

284.7 m

Source: Yahoo!

In March 2020, Procurri's second-hand IT hardware business spiked up on buying ahead of lockdowns. 

Procurri's hardware generally go for large discounts (50-80%) to OEM pricing. 

But other business activity, especially its third-party maintenance which has good gross profit margins, was sharply curtailed by lockdowns, said Procurri chairman Sean Murphy at a 2Q results briefing.

"I
 don't think there's demand destruction. These projects will still be there but they're definitely delayed."

SeanMurphy11.19b

"Let me reassure you that the core of the 
company is very, very strong.

"I understand that earnings growth is the way we keep score and we haven't played the game very well. We've got to do better. During the pandemic, we're trying to be smart, trying to keep our cash position strong and being real thoughtful about how we start scaling this business. We want to start growing and growing fast."

-- Sean Murphy, 
Chairman & Global CEO

Mr Murphy expects that there will be a big tailwind for Procurri when the pandemic eases.

In particular, one business segment -- IT Asset Deposition (ITAD) -- is already doing well even in the midst of the lockdown because companies are migrating to the cloud. 

Procurri has signed up ITAD deals with large companies whereby they outline schedules over the next three or four years about IT assets that will be decommissioned.  Procurri can pre-sell the components.


Procurri expects that its ITAD business, which has teamed up with Ingram Micro since last November, will experience accelerated growth.

"It's a direct correlation to cloud migration -- the faster the cloud grows,  the faster our ITAD grows. This is a huge opportunity for the future, it's coming even faster than I could have expected 12 months ago," said Mr Murphy.

He added: "E
ventually this business will be bigger than the others (IT distribution and Lifecycle Services) put together."

VincentChoo ProcurriCFO Vincent ChooThe lockdowns crimped many businesses around the world, disrupting supply chains and reining in customers' purchasing decisions.

Procurri managed a 1.6% rise in revenue to S$110.5 million in 1H2020.

Gross profit (S$32.9 million) took a hit (-16% y-o-y) primarily due to an increase in allowance for stock obsolescence.


But Procurri continued to generate positive cash flows from operations (S$18.9 million in 1H2020 versus S$25.8 million in 1H2019).

Procurri maintained a strong balance sheet and was in a net cash position of S$17.7 million as of end-June 2020.


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