SG Small-Mid Cap 3Q19 Results Round-up - UOB Kay Hian 2019-12-06: More Beats Than Misses

Singapore Small-Mid Cap Highlights - UOB Kay Hian Research  | SGinvestors.io CSE GLOBAL LTD (SGX:544) FU YU CORPORATION LTD (SGX:F13) KOUFU GROUP LIMITED (SGX:VL6) PENGUIN INTERNATIONAL LIMITED (SGX:BTM)

SG Small-Mid Cap 3Q19 Results Round-up - More Beats Than Misses




Manufacturing: Stronger-than-expected showing from Valuetronics and Fu Yu.



Consumer: Mixed bag.



Other beats include BRC Asia and Propnex.



Other small and mid-cap companies’ result highlights.


OVERSEAS EDUCATION LIMITED (SGX:RQ1)


CSE GLOBAL (SGX:544)


ISOTEAM (SGX:5WF)


PENGUIN INTERNATIONAL (SGX:BTM)


SUNPOWER GROUP (SGX:5GD)


SUNNINGDALE TECH (SGX:BHQ)


TIANJIN ZHONG XIN PHARMACEUTICAL GROUP (SGX:T14)



Our top picks are Koufu, Fu Yu, Penguin International and CSE Global.

  • We believe the market has overlooked KOUFU GROUP (SGX:VL6)’s strong performance and cash generation ability that has helped it build a significant net cash position (equivalent to 22% of Koufu Group’s market cap as of 3Q19), and is trading at a deep discount of 13.4x 2020F PE, vs local peer average of 17.8x.
  • We also like FU YU CORPORATION (SGX:F13) for its high sustainable dividend yield of 7.1% for 2019F and cheap 2020F EV/EBITDA at 3.2x. We note that at this attractive valuation and with its geographically diversified plants, it is a potential takeover target.
  • Recently initiated PENGUIN INTERNATIONAL (SGX:BTM) is also our top pick as we forecast strong EPS growth of 42.9% for 2019, backed by a healthy delivery pipeline and growing demand for its new products in the fields of fire-fighting and renewable energy. Penguin International should continue to benefit from Nigeria’s piracy issues and the low transportation costs of offshore crewboats.
  • As for CSE GLOBAL (SGX:544), we believe its healthy orderbook and earnings-accretive acquisitions should lift earnings in 2020. Strong 3Q19 order wins will likely see CSE GLOBAL end 2019 with an orderbook of S$300m-320m – the highest in recent years. In addition, we expect recent acquisitions to drive earnings growth in 2020, particularly its acquisition of Volta from which we conservatively forecast net profit contribution of S$3m in 2020. At current prices, the stock also offers an attractive dividend yield of 5.1%.





John Cheong UOB Kay Hian Research | https://research.uobkayhian.com/ 2019-12-06
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