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
- With the current FY22F sector average P/E having risen to 15.3x (previously: 13.5x), our target price for Frencken is raised to S$2.38, driven by the higher P/E peg and our earnings upgrades.
- See
- Downside risks are supply automation segments.
William TNG CFA
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-08-04
SGX Stock
Analyst Report
2.34
UP
1.870