Fu Yu Corp - RHB Invest 2016-03-11: Top Pick across the manufacturing space

Fu Yu Corp - RHB Invest 2016-03-11: Top Pick across the manufacturing space FU YU CORPORATION LTD F13.SI 

Fu Yu Corp - Top Pick across the manufacturing space  

  • We brought Fu Yu Corporation (FUYU SP), our top Pick across the manufacturing space in Singapore on a Non-Deal Roadshow yesterday and here are our key takeaways from it. 
  • Firstly, management indicated that more dividends likely to be given as long as retained profits and profits generated can support the payout. 
  • We have also discovered that the share buyback mandate to purchase up to 10% of its total share has been approved and management is in the midst of allocating its budget for the buyback. 
  • They have also indicated that they are keen to meet the minimum trading price of SGD0.20 without exploring the option of share consolidation
  • We expect cost-cutting likely to continue, with an expected 10-15% decline in FY16 expenses. 
  • In addition, depreciation is also likely to further drop by SGD1.5m while capex remains around SGD7- 10m for FY16. 
  • Next, we expect revenue slide in FY16 to halt, with single digit revenue growth from existing and new customer. 
  • Lastly, margins can likely maintain or further improve from additional cost cutting and right sizing carried out in FY16. 
  • Maintain BUY with a DCF-backed TP of SGD0.29.

Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2016-03-11
RHB Invest SGX Stock Analyst Report BUY MAINTAIN BUY 0.29 Same 0.29