Frencken Group - CGS-CIMB Research 2020-05-14: 1Q20 Net Profit Slightly Above Expectations

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

Frencken Group - 1Q20 Net Profit Slightly Above Expectations

  • Frencken Group's 1Q20 revenue was slightly below expectations at 22% of our FY20F forecast (1Q19: 24%).
  • 1Q20 net profit was slightly above expectations (22% of our FY20F vs. 19% in 1Q19) on undisclosed foreign exchange gains and lower operating costs.
  • Reiterate ADD call with an unchanged Target Price of S$1.06.



Frencken Group's 1Q20 net profit slightly above expectations

  • Frencken Group (SGX:E28) provided its 1Q20 business update yesterday. No detailed financials were released. See Frencken Group Announcements. 1Q20 revenue (-4.8% y-o-y to S$151.4m) was slightly below our expectations at 22% of our full-year forecast (1Q19: 24%).
  • Net profit (+10.5% y-o-y to S$9.5m) was slightly above at 22% of our full-year expectations (1Q19: 19%) due to undisclosed foreign exchange gains and lower operating expenses. Gross profit margin was relatively stable at 15.6% in 1Q20 versus 15.8% in 1Q19.
  • Frencken Group's net cash as at end-Mar 2020 was S$92.9m (26.7% of market cap).
  • The semiconductor and medical segments reported y-o-y growth while the industrial automation and analytical segments experienced lower sales y-o-y. Automotive related sales fell 22.6% y-o-y.


FY20F outlook

  • Except for a factory in India, all of Frencken Group’s factories have resumed normal operations. The group has limited visibility for FY20F due to the effects of the Covid-19 outbreak.
  • In terms of 2Q20F revenue guidance, the semiconductor and medical segments are expected to post q-o-q growth, while q-o-q declines are expected for the industrial automation and automotive segments. The analytical segment is expected to see stable revenue q-o-q.


Reiterate ADD






William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-05-14
SGX Stock Analyst Report ADD MAINTAIN ADD 1.060 SAME 1.060



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