#3 Hong Leong Asia
CGS CIMB has
maintained its Add rating on the company with a target price of $1.00.
Sequential recovery from its unit and construction rebound in Singapore are bound to help the company.
"Building materials unit (BMU) recorded 2H21 PBT of S$19m (+19% yoy), supported by rising demand for concrete products in Singapore as construction activity recovers.
The Building and Construction Authority (BCA) expects further demand recovery for building materials in Singapore in CY22F.
[It also] forecasts industry-ready mixed concrete demand to grow 8-21% and precast concrete demand to grow 45-63%.
We forecast HLA’s building materials segment to see PBT growth of 27% yoy in FY22F, riding on 1) stronger sales volume in Singapore, 2) narrower Tasek losses, and 3) higher profit contribution from associate BRC Asia.
Commercialisation of HLA’s integrated construction and prefabrication hub (ICPH) in 4Q22F could further boost segment earnings in FY23F"
>> Read more about the company here.
#4 Sembcorp Industries
Phillips Capital has upgraded the company to
Accumulate rating on the stock with a target price of $2.940.
Impressive results and more than healthy cash flow are driving the valuation.
"FY21 net profit of $300mn was above our estimates, at 146% of FY21e
. The beat came from higher revenue from Conventional Energy, which surpassed our expectations on the back of better spark and dark spreads particularly in 4Q21.
The better spreads arose from stronger commodity price and better demand-supply dynamics.
Net profit before exceptional items was 69% higher YoY, lifted by higher contributions from all key revenue segments:
- Renewables
- Integrated Urban Solutions and
- Conventional Energy
Its coal business in India – Thermal Power Project I (P1) and Thermal Power Project II (P2) – also performed better than expected with higher demand lifting turnover.
This segment remained the key contributor to turnover, accounting for 84% of overall revenue.
Net gearing declined by more than 20% of our FY21e forecast
. Free cash flow rose 71% YoY as better operating performance drove higher net cash from operating activities.
The repayment of its project finance debt for Sembcorp Energy India and Sembcorp Green Infra drove net gearing lower to 160.8% from 199.8% in the same period last year."
>> Read more about the company here.
#5 UMS Holding Ltd
CGS CIMB has
maintained its Add rating on the stock and with its target price at $1.63.
Positive outlook from the management and order book bodes well for the company.
"UMS has guided for strong orders given that its key customer continued to provide positive guidance for FY22F. According to the World Semiconductor Trade Statistics (WSTS), global semiconductor sales are set to grow by 8.8% in 2022, to US$601bn.
Management said UMS’s new Penang factory, which is scheduled for completion by endFY22F, will increase its current production capacity substantially.
[It will also] position the group to take on new orders from potential new customers which are expanding in Southeast Asia"
>> Read more about the company here.
#6 Frencken Group
UOB Kay Hian has maintained
its BUY rating on the company with a target price of $6.94.
With semi-conductor being a clear growth driver, it will help the company on its other slowing down segments.
"Frencken Group’s (Frencken) 2H21 revenue of S$391.8m (+19.4% yoy, +4.4% hoh) brought 2021 revenue to S$767.1m (+23.6%).
For the year, this was led by positive contributions from the semiconductor (+51.5%), medical (+26.4%) and analytical & life sciences (+25.3%) sub-segments, but was partially offset by industrial automation (-15.9%) and automotive (-15.9%)
Relative to 2H21, sales guidance is anticipated to be better for semiconductor, industrial automation and automotive sub-segments, while medical and analytical & life sciences sub-segments will be stable on a hoh basis."
>> Read more about the company here.
#7 Hyphens Pharma International
CGS CIMB has
maintained its Add rating on the company with a target price of $0.36.
Astute acquisition of new company is likely going to help with the bottom line of the company.
"FY21 revenue and core profit was in line at 99%/103% of our estimates. HYP completed the acquisition of Novem by end-FY21, ahead of our expected end-FY22F. This implies that Novem’s full FY22F earnings will be reflected in HYP’s books.
We expect Novem to contribute c.S$1.5m (c.22% of FY21 net profit) to HYP’s FY22F bottomline.
Based on Novem’s FY18-20 net profit of S$1.5m-2m, which would be partially offset by finance costs and goodwill amortisation in relation to the acquisition.
HYP’s inventory days jumped to 118 days in FY21 (vs. 80 days in FY20) because Novem’s books were consolidated in their entirety in FY21 despite only contributing a month’s worth of revenue.
Management guided that Novem tends to keep six months’ worth of inventory as Novem’s tender contracts with restructured hospitals typically require them to keep at least five months’ worth of stock on hand.
We thus adjust FY22F inventory days to 107 days."
>> Read more about the company here.
