JADASON ENTERPRISES LTD (SGX:J03)
Jadason Enterprises Limited - Outlook Remains Challenging
- JADASON ENTERPRISES LTD (SGX:J03) reported a net loss of S$1.8m for 2Q19. 1H19 net loss of S$3.3m formed 55% of our full-year net loss forecast.
- The loss was mainly due to a decline PCB drilling segment sales.
- The company continues to guide for a challenging 2H given the trade tensions between China and the US, which affects Jadason’s end customers.
- Maintain ADD and Target Price of S$0.059.
1H19 deemed in line
- We deem Jadason's 1H19 loss of S$3.3m (55% of our full-year net loss forecast) in line. We expect 2H19 to remain challenging for Jadason.
- Including cash and bills receivables, Jadason remains in a net cash position.
- Cash flow generation remained healthy despite the losses. In 2Q19, net cash from operations was S$2.8m, while in 1H19, net cash from operations was S$1.2m.
- No interim dividend was declared.
Expecting a challenging 2H
- The trade conflict between China and the US continues to have a negative impact on Jadason’s customers, leading to lower demand for its PCB drilling service. Although 5G roll-out in China may stimulate demand, the pace of the roll-out is now uncertain given the adverse business environment.
Maintain ADD
- Our Target Price remains set at its FY19 BVPS of S$0.059.
- Risks include further order declines.
- Potential re-rating catalysts are resolution of the trade war and stronger-than-expected orders, especially for 5G mobile services.
William TNG CFA
CGS-CIMB Research
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https://research.itradecimb.com/
2019-08-15
SGX Stock
Analyst Report
0.059
SAME
0.059
