Excerpts from RHB Research's "billion & below" report dated 23 Nov 2016
|In our latest feature story, we profile Chiwayland Intl^(ACW) (new name - CWG International). The group has development properties in US, Australia and China and will be moving into building international schools as well.
With over RMB 3.3bn of presales to be booked in 4Q16, a reverse of losses for a profitable FY16F is highly probable.
A dividend policy of a minimum of SGD0.01/pa also represents a dividend yield of 7% at current share price levels.
With land prices surging in China, the group stands to benefit strongly, coupled with its Australia projects recognition in FY17, the group stands to enjoy strong earnings growth for the next few years.
• Since the inception of our model portfolio in September 2015, it has registered a 31.2% return, outperforming the STI index (+1.3%). The best performing stocks within our portfolio are Yoma Strategic (Z59) (+58.5%), followed by ISOTeam (5WF) (+31%).
• We will be investing in 1,000,000 shares of CWG international at SGD0.14 apiece. We are adding another 200,000 shares of Silverlake Axis (5CP) at SGD0.555 a piece. We believe that its core business which suffered a slump in 1Q17 will likely pick up in 2H17 due to the concentration of larger projects scheduled at the end of FY17F. A special dividend or share buyback due to its gains of SGD267.7m from the sale of its GIT shares will likely happen by 2H17F as well.
We are divesting Yoma Strategic, City Developments, Q&M Dental as well as Guocoleisure, to fund our latest additions.
• We will also be adding 500,000 shares of Fu Yu^(F13) at SGD0.189 apiece.
Fuyu. With 74% net cash, we like Fuyu for its cash generation, high dividend yield of 8% and strong balance sheet, we think that they are a very attractive acquisition target by its overseas and local peers, or even private equity funds, especially after the recent takeover of Innovalues by Northstar Private Equity group.
• We are also adding 1,000,000 shares of Spackman (40E) at SGD0.145 apiece. The group, probably in its best health since its IPO, is primed for a strong turnaround due to a few key near-term catalysts.
• We are adding another 300,000 shares of Acromec at SGD0.325 a piece. Despite their profit guidance which was mainly impacted by variation orders it has completed that it could not recognize as revenue, we believe that this issue should be settled by 1H17, and would likely contribute to its FY17F NPAT. We also expect M&A activities to be carried out soon to boost their recurring income stream. With the robust healthcare sector in Singapore set to expand rapidly in the next few years, we think that Acromec will likely continue to win more major contracts which will enable them to likely deliver stellar result, especially in FY17F.
Full report here.