Manufacturing & Technology - RHB Invest 2019-12-10: Brighter Skies Ahead; Upgrade To OVERWEIGHT

Manufacturing & Technology - RHB Investment Research | SGinvestors.io FRENCKEN GROUP LIMITED (SGX:E28) FU YU CORPORATION LTD (SGX:F13) AVI-TECH ELECTRONICS LIMITED (SGX:BKY) CSE GLOBAL LTD (SGX:544)

Manufacturing & Technology - Brighter Skies Ahead; Upgrade To OVERWEIGHT

  • Now OVERWEIGHT. With ongoing optimism on the signing of the Phase One deal between China and the US, the tech stocks re-rating should continue into 1Q20. The semiconductor sector has also shown signs of bottoming out, with global industry leaders guiding for a better outlook.
  • We upgrade our sector weighting, and adjust the growth rate assumption in our DCF calculation to 1% from 0% for AVI-TECH ELECTRONICS (SGX:BKY), CSE GLOBAL (SGX:544) and FU YU CORPORATION (SGX:F13). We also increase DCF-based target prices by c.7-11%, but maintain earnings estimates.



Signs of a turnaround by global leaders in 2H19.

  • Qualcomm’s 4Q19 net income turned positive, at USD0.5bn, after incurring losses a year earlier. Intel also reported a positive set of 3Q19 numbers and raised its full-year revenue projection to USD71bn, up USD1.5bn from July’s guidance. Applied Materials’ 4Q19 results also reflected a healthy uptick in demand for semiconductor equipment, and its outlook points to a recovery for the beaten-down semiconductor sector.


Maintain BUY on Fu Yu, with a higher DCF-based Target Price of SGD0.27



Maintain BUY on Avi-Tech, with a higher DCF-based Target Price of SGD0.44.



Downgrade Frencken to NEUTRAL from Buy, with a higher DCF-based TP of SGD0.91 from SGD0.82.



Top Picks






Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2019-12-10
SGX Stock Analyst Report HOLD DOWNGRADE BUY 0.91 UP 0.820
BUY MAINTAIN BUY 0.27 UP 0.240
BUY MAINTAIN BUY 0.44 UP 0.410
BUY MAINTAIN BUY 0.690 SAME 0.690



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