2Q17 Results
Semiconductor Equipment
Tech Manufacturing Sector
AEM HOLDINGS LTD
AWX.SI
JADASON ENTERPRISES LTD
J03.SI
MEMTECH INTERNATIONAL LTD
BOL.SI
VENTURE CORPORATION LIMITED
V03.SI
CEI LIMITED
AVV.SI
VALUETRONICS HOLDINGS LIMITED
BN2.SI
UMS HOLDINGS LIMITED
558.SI
SUNNINGDALE TECH LTD
BHQ.SI
Tech Manufacturing Services - Expecting Good 2Q17 Results
- Sunningdale Tech kicked off 2Q17 results reporting for the eight tech manufacturing services companies under our coverage. Its net profit rose 115.3% yoy in 2Q17.
- For the remaining seven stocks under our coverage, we expect six of them to report better yoy performance and one to report lower yoy earnings.
- Stay sector Overweight. Top picks: AEM Holdings, Jadason Enterprises, Memtech.
Sunningdale Tech 2Q17 broadly in line
- Sunningdale Tech’s 2Q17 results were broadly in line with consensus and our expectations at 24%/23% of FY17F. Excluding forex impact and retrenchment costs, adjusted net profit rose 57.1% yoy to S$10.9m.
- More importantly, the company guides that its order book is stable and 2H17 is expected to be seasonally stronger. (See report: Sunningdale Tech Ltd - Gross Margin Maintained Above 15%)
Companies that could report better 2Q17 performance
AEM Holdings
- We expect AEM Holdings to report a net profit of S$5.2m or more when it reports 2Q17 results. This would represent a 300% yoy increase. Investors will be looking out for guidance for the full year and outlook for FY18.
UMS Holdings
- Given the strong industry data for the semi-con industry, we believe UMS Holdings’ 2Q17 net profit could match its 1Q17 net profit of S$11.2m. This would represent 72.3% yoy net profit growth.
Memtech
- Memtech International reported 2Q16 net loss of US$1.4m due to order delays from a customer. In 1Q17, the group reported a net profit of US$1.7m.
- We believe the company is on track for a stronger 2H17 and could report a high single digit qoq percentage growth in 2Q17 earnings.
Venture Corp
- Venture Corp reported a net profit of S$43.4m in 2Q16 and S$48.6m in 1Q17. We believe the business momentum has been strong for Venture. Even a low 5% qoq growth in 2Q17 earnings would translate into 17.6% yoy earnings growth.
- We see upside risk to our earnings forecast for Venture for FY17F.
Valuetronics
- The company reported 1QFY3/17 net profit of HK$29m, which excludes sales contribution from smart home lighting.
- We expect yoy revenue growth in 1Q18 to mitigate weaker gross margin (due to product mix changes), resulting in yoy improvement in overall earnings.
Jadason Enterprises
- Jadason Enterprises reported a loss of S$1.2m in 2Q16. In 1Q17, the group reported S$0.28m net profit. We believe 2Q17 will be profitable and will be better qoq. However, we are expecting repair costs (to recondition second-hand drilling machines) to have an impact on 2Q earnings.
- 2H17 will be when earnings pick up significantly if there are no hiccups in its business with a key customer.
CEI may report weaker 1H17 but DPS should be maintained
CEI Holdings
- CEI Holdings reported a net profit of S$4.6m and an interim DPS 4.80 Scts in 1H16. There is a risk that 1H17 earnings could decline yoy due to the weaker US$ vis-à-vis the S$.
- In 1H17, the US$ weakened by 4.9% year-to-date against the S$. However, we expect CEI Limited to maintain its interim DPS at 4.80 Scts.
Maintain sector Overweight, Top Picks
- Downside risks to sector call are order delays by customers and exchange rate volatility.
- Our top picks are AEM Holdings, Jadason Enterprises and Memtech.
William TNG CFA
CIMB Research
|
NGOH Yi Sin
CIMB Research
|
http://research.itradecimb.com/
2017-08-03
CIMB Research
SGX Stock
Analyst Report
3.390
Same
3.390
0.170
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0.170
1.160
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1.160
