Excerpts from analyst's report

RHB Research analyst: Jarick Seet

FuYu info3.16 002NextInsight infographicsWe brought Fu Yu Corporation (FUYU SP), our top Pick across the manufacturing space in Singapore on a Non-Deal Roadshow yesterday and here are our key takeaways from it.

Firstly, management indicated that more dividends likely to be given as long as retained profits and profits generated can support the payout.

We have also discovered that the share buyback mandate to purchase up to 10% of its total share has been approved and management is in the midst of allocating its budget for the buyback.

JarickSeet11.14Analyst Jarick Seet. They have also indicated that they are keen to meet the minimum trading price of SGD0.20 without exploring the option of share consolidation. We expect cost-cutting likely to continue, with an expected 10-15% decline in FY16 expenses.

In addition, depreciation is also likely to further drop by SGD1.5m while capex remains around SGD7- 10m for FY16. Next, we expect revenue slide in FY16 to halt, with single digit revenue growth from existing and new customer.

Lastly, margins can likely maintain or further improve from additional cost cutting and right sizing carried out in FY16. Maintain BUY with a DCFbacked TP of SGD0.29.

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