Singapore Small-Mid Cap 1H20 Results Round-up - UOB Kay Hian 2020-08-28: More Beats Than Misses; Stay Selective On Quality Names

Singapore Small-Mid Cap Stocks - UOB Kay Hian Research  | SGinvestors.io RIVERSTONE HOLDINGS LIMITED (SGX:AP4) FOOD EMPIRE HOLDINGS LIMITED (SGX:F03) FRENCKEN GROUP LIMITED (SGX:E28)

Singapore Small-Mid Cap 1H20 Results Round-up - More Beats Than Misses; Stay Selective On Quality Names




Beneficiaries of COVID-19 – Riverstone & Sheng Siong beat expectations.



Manufacturing – Largely in line; better cost management helped curb sales decline.



Consumer – Consumer staples outperformed but F&B services missed.



Other beats include Sunpower Group (SGX:5GD) and PropNex (SGX:OYY).



Other small mid cap company results highlights.


BRC Asia (SGX:BEC)

  • BRC Asia (SGX:BEC)’s 3QFY20 net loss of S$2.5m did not come as a surprise, given the curb to construction works. Credit risk remains as the fulfilment of certain pre-COVID contracts could become unprofitable, given heightened costs and lower efficiencies associated with current construction works. While there have been positive developments, we await better visibility on the rate of recovery as well as a better pick-up in new project tenders.
  • Downgrade BRC Asia to HOLD with a lower PE-based target price of S$1.18. Entry price: S$1.05.

CSE Global (SGX:544)

  • CSE Global (SGX:544)’s 2H20 core net profit of S$12m (+27% y-o-y) was in line, forming 49%/50% of our/consensus full-year estimates. Revenue grew 25% y-o-y in 2Q20 with growth across all segments. Order intake rose 8.5% y-o-y in 2Q20, setting up a strong order backlog of S$294m (+57% y-o-y), providing the group with a steady revenue base for 2020.
  • Outlook for infrastructure and mining remain positive while O&G could see some weakness. Dividend yield is attractive at 5.1%.
  • Maintain BUY on CSE Global with a lower PE based target price of S$0.59.

Penguin International (SGX:BTM)


Singapore Medical Group (SGX:5OT)


Tianjin Zhongxin Pharmaceutical (SGX:T14)



Singapore Small/Mid Cap Top picks: Riverstone, Food Empire, and Frencken.


Riverstone (SGX:AP4).


Food Empire (SGX:F03).

  • Trading at 8.7x 2021F PE vs > 20x for its regional peers, Food Empire's valuation is due for a re-rating in our view. Although some of Food Empire's core markets in Eastern Europe are still under a partial lockdown, the restrictions are much less stringent compared to Mar-Apr 20 and have gradually eased since May-Jun 20. This is evident through the significant improvement in the retail sales for countries such as Russia (retail food sales: Jul 20: -2.2% y-o-y, Apr 20: -9.2% y-o-y), Ukraine (retail trade turnover: Jul 20: +7.8% y-o-y, Apr 20: -11.6% y-o-y) and other CIS markets.
  • Furthermore, we believe Food Empire’s sales should be more resilient against an economic slowdown given that its products are consumer staples with relatively inelastic demand.

Frencken Group (SGX:E28).






John Cheong UOB Kay Hian Research | Singapore Research Team UOB Kay Hian | https://research.uobkayhian.com/ 2020-08-28
SGX Stock Analyst Report BUY MAINTAIN BUY 6.000 SAME 6.000
BUY MAINTAIN BUY 0.850 SAME 0.850
BUY MAINTAIN BUY 1.370 SAME 1.370



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