FRENCKEN GROUP LIMITED (SGX:E28)
Frencken Group - Semiconductor Turnaround Beneficiary
Benefitting from Semiconductor turnaround; Industrial Automation remains key.
- We expect FRENCKEN GROUP (SGX:E28) to benefit from the turnaround in the Semiconductor segment given its c.20% revenue exposure. Industrial Automation remains a key division, riding on the optimistic outlook of its key customer.
- Frencken Group’s strong presence in a wide variety of industries and business segments - Automotive, Analytical & Life Science, Medical, Semiconductor and Industrial & Industrial Automation provides greater resilience and stability.
- At 9.4x FY19F and 8.5x FY20F earnings, Frencken Group is trading at about 30% discount to its peers’ average of c.12x price-to-earnings (PE). In our view, this discount is too steep.
- Frencken Group Share Price is supported by a dividend yield of about 3.2%, based on a 30% payout ratio. See Frencken Group Dividend History; Frencken Group Target Price.
Where we differ:
- We use a lower PE multiple of 10x, which is at a 20% discount to its peers’ average given Frencken Group’s smaller scale.
Potential Catalysts:
- Positive outcome from US-China trade negotiations;
- Better operational efficiency to improve margins.
See attached PDF report for complete analysis on FRENCKEN GROUP (SGX:E28).
- See also recent SGX Market Update: 5 Tech & Hardware Stocks Amongst Last Week’s SGX Most Active 50.
Lee Keng LING
DBS Group Research
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https://www.dbsvickers.com/
2019-11-29
SGX Stock
Analyst Report
1.06
UP
0.950
