SMC Monthly - DBS Research 2016-02-04: Look for result boosters

JAPFA LTD UD2.SI RIVERSTONE HOLDINGS LIMITED AP4.SI MM2 ASIA LTD 41C .SI OSIM INTERNATIONAL LTD O23.SI

SMC Monthly - Look for result boosters

With STI falling by nearly 9% in January, small cap names were not spared and our picks fell by an average of 5.9% since our last issue
We focus our picks on names that should report strong earnings or declare an attractive dividend
Good results - Japfa, Riverstone, mm2, Osim
Dividends - CMH Pacific

Despite the challenging start, we keep four of our five conviction picks intact.
We believe Japfa (BUY, TP S$0.90), Riverstone Holdings (BUY, TP S$1.41) and mm2 (BUY, TP S$1.05) should report strong upcoming results that should help their share prices to re-rate.
We pick Osim (BUY, TP S$1.28) to replace Sheng Siong given our recent upgrade of the stock on better-than-expected results.
Meanwhile, CMH Pacific (BUY, TP S$1.45) is likely to reward shareholders with a final dividend of up to 3.5Scts.

Following the recent market correction, many Singapore SMC names are trading well below their book values, suggesting that value has started to emerge.
Aside from oil & gas-related companies that could potentially face asset impairment charges in the face of depressed oil prices, we highlight a couple of names that offer value:
1. Midas Holdings (BUY, TP S$0.49) is trading at c. 0.5x P/BV despite being profitable,
2. Perennial Real Estate Holdings (BUY, TP S$1.32) is at just 0.5x P/BV and
3. Centurion Corporation (BUY, TP S$0.59) trades at 0.6x P/BV and less than 7x PE.

Best World could enter a period of rapid growth if the company successfully breaks into the Chinese direct-selling market while electronic component and product distributor, Serial System, has ambitions to grow beyond the electronic space.
Leveraging on its competitive advantages in the manufacture of plastics parts and tooling, Sunningdale is well positioned to tap growth opportunities in the high-volume consumer/IT industry.
We also feature leading local F&B group, Jumbo, whose growth is underpinned by new outlets in Shanghai and Singapore, in an Equity Explorer.

Paul YONG CFA DBS Vickers | Singapore Research Team DBS Vickers | http://www.dbsvickers.com/ 2016-02-04

DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.41 Same 1.41

BUY Maintain BUY 0.90 Same 0.90

BUY Initiate BUY 1.05 Same 1.05