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Frencken Group - CGS-CIMB Research 2021-08-04: A Year Of Equal Halves?

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

Frencken Group - A Year Of Equal Halves?

  • Frencken will report its 1H21 results after market closes on 12 Aug 2021.
  • With the strong demand from the semiconductor industry, Frencken's 2Q21F net profit could grow 62.7% y-o-y.
  • Our target price for Frencken is raised to S$2.34, driven by our earnings upgrade and a higher sector average P/E multiple.



Frencken's 2Q21 net profit could grow 62.7% y-o-y

  • Frencken (SGX:E28) will report its 1H21F results after market closes on 12 Aug 2021. Over FY18-20, the first half of the year accounted for 38-42% of the full-year’s core net profit (average: 40%), while the second half accounted for 58-62% (average: 60%).
  • Given the strong performance of the semiconductor industry (23% of 1Q21 revenue), we think FY21F could possibly see a departure from the historical norm, with a 50/50 core net profit split between 1H21F and 2H21F.


ASML (a key semicon customer) has raised sales guidance

  • According to our European research partner Liberum, ASML Holding’s (ASML NA) initial guidance (in Jan 2021) for its 2021F revenue growth was around 12% to €15.7bn. Post-2Q21 results, ASML raised growth driver.


Raising our earnings expectations

  • According to the Semiconductor Industry Association (SIA), global sales of semiconductors reached also project some margin improvements.


Reiterate ADD on Frencken with higher target price






William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-04
SGX Stock Analyst Report ADD MAINTAIN ADD 2.34 UP 1.870



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