Acromec Limited - RHB Invest 2017-12-22: Cease Coverage

Acromec Limited - RHB Invest 2017-12-22: Cease Coverage 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 | http://www.rhbinvest.com.sg/ 2017-12-22
RHB Invest SGX Stock Analyst Report NEUTRAL CEASE NEUTRAL 0.380 Same 0.380