Excerpts from analyst's report

GlobalTestingCorp5.15Global Testing Corp (GTC SP, NR) a semiconductor testing services provider based in Taiwan. Photo: Company.
KGI Fraser analyst:
 Yuxuan He

Global Testing Corp (GTC SP, NR) a semiconductor testing services provider based in Taiwan, a company we highlighted on 2 Mar and 29 Apr 2015, it goes ex-distribution (S$0.075 per share on pre-consolidated basis) and will have shares traded on a consolidated (20-1) basis today (22 May 2015).

We believe this stock has good potential to be a multi-bagger based on:
(1) Big expected earnings growth just through lower depreciation expense in the coming years.
(2) Strong ability in generating positive cash flows over the last few years.
(3) High likelihood of paying dividends going forward; if GTC were to pay just one-third of FY14’s free cash flow, the stock would yield about 12% on ex-distribution basis.
(4) Sanguine outlook for the semiconductor industry.
(5) Extremely cheap valuations when compared to peers.

Our fair value for the stock lies in the range of S$3.17-S$4.58 based on P/EBITDA and P/FCF valuation on an ex-distribution and post-consolidation basis. The theoretical price that should trade today, based on yesterday’s closing price is S$1.28 [(S$0.139 – S$0.075) x 20]. 


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