Small Mid Cap Highlights - RHB Invest 2019-10-15: Sticking To Our Top Picks

Small Mid Cap Highlights - RHB Invest | SGinvestors.io OXLEY HOLDINGS LIMITED (SGX:5UX) UNUSUAL LIMITED (SGX:1D1) CSE GLOBAL LTD (SGX:544)

Small Mid Cap Highlights - Sticking To Our Top Picks

  • Progress of trade talks to determine if risk-on mode returns. Since the US initiated a trade war against China and other key deficit trading partners, Singapore stocks (especially manufacturing) have been significantly impacted.
  • A potentially positive 2H19 will hinge on the outcome of the trade talks, which have now been spilt into phases – Phase 1 was agreed in principle last week. However, until a resolution is reached, we remain NEUTRAL on the sector with Top Picks: UnUsUaL (SGX:1D1), Oxley (SGX:5UX), and CSE Global (SGX:544).


  • Oxley (SGX:5UX) is a home-grown property developer with a diversified portfolio including property development, property investment, and project management. The group has a business presence across 12 geographical markets including Singapore, UK, Ireland, Cyprus, Australia, Cambodia, Malaysia, Indonesia, China, Japan, and Myanmar.

Record FY20F coupled with potential special dividends.

  • Management guided that excess cash – after paring down gearing – will be used to reward shareholders with special dividends, if there are no suitable opportunities at the time.

Gearing slowly being pared down.

Unlocking value in its key asset, the Stevens Road hotels.

  • The Stevens Road hotels, which had a previous offer of SGD950m, is an attractive proposition for potential buyers. The replacement cost of building a similar hotel in the same area will likely also be north of SGD1bn, due to the surge in development charges required for hotel use – to SGD14,000 per sqm from SGD8,200 in 2017. The land terms have also been converted into freehold, which should be even more attractive to buyers.


  • UnUsUaL (SGX:1D1), established in 1997, is one of the leaders in concert promotion and event production in Asia. The group predominantly operates through two business segments – production and promotion. It specialises in producing and promoting large-scale live events and concerts in Singapore, and the region.

Scalable and resilient business model – branching globally.

  • UnUsUaL has a scalable business model. It can leverage on strong relationships with various artistes and is able to host concerts in various venues globally, especially China. Top artistes can easily tour 40- 60 cities in 1-2 years, and thecompany has tested and proven the success of this concept, having brought Chinese singer GEM (real name Gloria Tang Sze-wing) to San Francisco for sold-out concerts in March and Singaporean artiste JJ Lin for sold-out shows in Sydney and Melbourne.

Expansion into family entertainment shows.

  • UnUsUaL has partnered with Sliding Door Entertainment to bring WWD arena spectacular on tour to 11 cities in Asia for a total of 117 shows. The group is also presenting DOI in South Korea and Taiwan with Feld Entertainment Inc this year. It has also developed and produced Apollo 11 – The Immersive Live Show with Nick Grace Management Ltd.

Strong FY20F pipeline should lead to strong 2Q-3Q20F.

  • 2Q20F ought to see revenue recognition of its family entertainment shows like DOI, WWD and Apollo (partially) plus the fully sold-out indoor stadium concerts of a 4-night Andy Lau concert, as well as Westlife, and Gfriend concerts, aside from the Kang Daniel’s fan meeting. In 3Q20F, two nights of JJ Lin’s concert is at a much larger venue (national stadium) – four times the capacity of the 2018 concert (tickets are already sold-out for 2 nights), and the full quarter recognition of Apollo.
  • The company still has upcoming concerts for JJ Lin in Macau, Hong Kong, Malaysia, Taiwan and Australia – it plan to add more nights in Sydney and Melbourne. Management is also in the midst of scheduling concerts for other artists which will be a further boost to its pipeline.
  • See UNUSUAL LIMITED (SGX:1D1); UnUsUaL Limited Share Price; UnUsUaL Limited Target Price; UnUsUaL Limited Analyst Reports; UnUsUaL Limited Dividends; UnUsUaL Limited Announcements; UnUsUaL Limited Latest News.


  • CSE Global (SGX:544) is a systems integrator, focusing on the provision and installation of control systems, as well as communications and security solutions. The firm provides services to the oil & gas, infrastructure and mining industries. CSE Global has an international presence spanning the Americas, Asia-Pacific, Europe, the Middle East, and Africa. The company operates a network of 39 offices in 17 countries with a team of more than 1,000 employees.

Accretive acquisition of Volta.

  • Accretive acquisition of Volta, which is a custom-engineered electrical equipment centre solutions provider. For a price tag of SGD34.8m – based on a FY18 net profit before tax of SGD6.9m – this translates into c.6.7x P/E (NPAT), which is highly accretive in nature. However, CSE Global is likely to gear up as a result of the purchase.
  • If we assume the group will undertake the acquisition fully funded by debt, PAT should be SGD4.1m due to the additional financing costs. This will translate into c.8.4x P/E – which is still an undemanding valuation.

An attractive dividend yield of 5.9%.

  • CSE Global has guided for a full-year dividend of 2.75 SG cents, consistent with FY18. Net cash position of SGD8.6m as at 30 Jun 2019 was down from SGD34.8m as at 31 Mar 2019 mainly due to working capital purposes. Operating cash flow is expected to increase by end-FY19F.

Order intake increased 22.6% to 193.9m in 1H19

Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2019-10-15
SGX Stock Analyst Report BUY MAINTAIN BUY 0.430 SAME 0.430