ACROMEC LIMITED
43F.SI
Acromec Limited - Cease Coverage
- We are ceasing coverage on Acromec due to internal resource reallocation, coupled with the low institutional interest and trading liquidity of the stock.
- Our previous recommendation was NEUTRAL with a TP of SGD0.38.
The Company
- Founded by its current executive directors in 1996, Acromec Ltd (Acromec) specialises in architectural and mechanical works within controlled environments.
- The company spent its early years building rapport with its clients, and managed to secure many major projects by 2001.
Constant innovation and diversification are vital for the company’s growth.
- Acromec started to venture into the biomedical and academia sectors in 2002 and into the healthcare sector in 2011. It was listed on the SGX Mainboard in Apr 2016.
- Its two main business segments are EPC and maintenance. 100% of its operations are in Singapore.
Lower margins due to stiff competition and cost pressures.
- We expect Acromec to face margin pressures ahead, due to stiff competition as well as the carry-over effect from the delay in the recognition of its variation orders and lower manpower productivity in a few of its major projects.
- The company is actively taking steps to streamline its processes so as to achieve cost and operational optimisation, and will also continue to monitor its costs, amid a tight foreign labour market and stiff competition.
- We do expect near-term downward pressures on margins for Acromec.
Jarick Seet
RHB Invest
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http://www.rhbinvest.com.sg/
2017-12-22
RHB Invest
SGX Stock
Analyst Report
0.380
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0.380
