Alpha Picks For 2020 - CGS-CIMB Research 2019-11-19: Analysts' Singapore Small Cap Picks

AEM HOLDINGS LTD (SGX:AWX) BOUSTEAD SINGAPORE LIMITED (SGX:F9D) CSE GLOBAL LTD (SGX:544) JAPFA LTD. (SGX:UD2) PROPNEX LIMITED (SGX:OYY)

Alpha Picks For 2020 - Analysts' Singapore Small Cap Picks

AEM HOLDINGS (SGX:AWX) (Rating: ADD, Target Price: S$2.12),
BOUSTEAD SINGAPORE (SGX:F9D) (Rating: ADD, Target Price: S$1.00),
CSE GLOBAL (SGX:544) (Rating: ADD, Target Price: S$0.73),
JAPFA (SGX:UD2) (Rating: ADD, Target Price: S$0.70),
PROPNEX (SGX:OYY) (Rating: ADD, Target Price: S$0.68).

Positive earnings momentum into 1H20; our channel checks suggest that AEM has leased new factory space to cope with stronger demand.
We expect more orders from Intel as it tries to catch up with competition.
New product launch (hybrid Test Handler) could help drive FY20 earnings.
Key risk is mainly 97% revenue dependence on Intel.
See AEM Holdings Share Price; AEM Holdings Target Price; AEM Holdings Analyst Reports; AEM Holdings Dividend History; AEM Holdings Announcements; AEM Holdings Latest News.

Energy-related segment to make a major comeback in 2H20, backed by a 5-year high orderbook.
Geospatial technology business continues to enjoy strong growth potential, riding on the “smart city” wave.
Valuation looks undemanding at 9.3x FY3/21F P/E, while backed by S$196m net cash (52% of market cap) and a stable dividend yield of 3.9%. Potential industrial REIT launch and stronger energy orders are catalysts.
See Boustead Share Price; Boustead Target Price; Boustead Analyst Reports; Boustead Dividend History; Boustead Announcements; Boustead Latest News.

We are excited about CSE’s earnings growth potential, given its padded order backlog of at least S$300m by end-2020 (end 3Q20: S$232.6m).
Though acquisitions within the year may have swung the balance sheet to a net debt position, we are still positive on them as they have broadened CSE’s regional reach or have been earnings accretive.
The stock trades at FY20F P/E of 10.4x, below its 5-year average. Re-rating catalysts/downside risks include higher-/lower than-expected order wins and GP margins.
See CSE Global Share Price; CSE Global Target Price; CSE Global Analyst Reports; CSE Global Dividend History; CSE Global Announcements; CSE Global Latest News.

According to Charoen Pokphand Foods (CPF TB) Nov 19 Vietnam swine prices could have risen above VND60k/kg, above Sep 19’s VND42k/kg and FY18’s high of VND50k/kg.
As at Oct 19, China’s raw milk prices rose by 8% y-o-y. Our HK consumer analyst expects raw milk prices to rise by 3-5% in FY20F lending a positive bias to JAP’s dairy segment.
We believe Japfa is en route to a cyclical recovery which offers further trading opportunity in the stock. The share price is currently trading at 10x CY21F P/E, below its 5-year average mean of 12.9x.
See Japfa Share Price; Japfa Target Price; Japfa Analyst Reports; Japfa Dividend History; Japfa Announcements; Japfa Latest News.

We expect upside to our earnings forecasts in 4Q19 and 1Q20 as a result of stronger primary private home sales volumes in 3Q19. URA recorded an average of c.1,200 units transacted per month in 3Q19 vs. c.650 units/mth in 1H19.
Market share in primary private segment expanded from 42.4% in FY18 to 45.3% in 9M19 due to increase in number of sales persons as a result of strong training programmes and ability to secure marketing appointments.
Dividend per share of 3.5 Scts is likely to be maintained in FY19F due to low capex requirements and large cash balance representing c.S$0.20 per share.
See PropNex Share Price; PropNex Target Price; PropNex Analyst Reports; PropNex Dividend History; PropNex Announcements; PropNex Latest News.