Frencken Group - DBS Research 2019-11-29: Semiconductor Turnaround Beneficiary

FRENCKEN GROUP LIMITED (SGX:E28) | SGinvestors.io 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).






Lee Keng LING DBS Group Research | https://www.dbsvickers.com/ 2019-11-29
SGX Stock Analyst Report BUY MAINTAIN BUY 1.06 UP 0.950



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