ANALYSTS SAY: Buy, Sell, Hold (23 Feb '18)

Sunningdale Tech Ltd

Ignore the FX noise

■ 4Q17/FY17 sales were in line at 26%/101% of our full-year forecast.

■ However, core net profit for 3Q17/FY17 came in below expectations (due to foreign exchange losses) at 24%/92% of our full-year forecast.

■ Excluding the exchange rate impact, 4Q17 net profit still declined by 19.1% yoy, compared to the reported 64.0% yoy decline.

■ Gross margin slipped to 13.4% in 4Q17 (3Q17:14.3%) due to negative exchange rate impact and lower average selling prices.

■ Our TP rises slightly to S$2.82, based on a higher FY18F P/BV of 1.374x (1.33x previously).

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Venture Corporation (VMS SP)

This Changes Everything

Our own investigation reveals strong evidence that Venture is the manufacturer of a leading consumer device, which has potential revenue in excess of S$2.5b p.a. A production ramp-up in 2017 to meet rising demand in Asia and Europe will likely continue into 2018. A launch of the device in the US will push production to full capacity, with earnings likely exceeding consensus estimate in 2018. Maintain BUY and raise target price to S$31.88, based on 19x 2018F PE.

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Wilmar: Ups final dividend to 7 cts

Wilmar reported a 25.4% increase in net profit to US$1.2b in FY17, beating ours and the street’s expectations; we were forecasting US$1.09b while Bloomberg’s consensus was US$1.06b. The good performance in Oilseeds & Grains and strong contributions from JVs and associates (mainly from China, India and Africa) were offset by weaker results in the Tropical Oils and Sugar businesses. We like Wilmar’s integrated business model and well-diversified operations, and the group expects to continue to achieve sustained growth. The internal restructuring of operations for the proposed listing of its China business is now largely completed. Should it be successfully executed, this should provide a catalyst for the stock. Meanwhile Wilmar has declared a final dividend of S$0.07/share, bringing full year dividends to S$0.10/share. This is 54% higher compared to S$0.065/share in FY16 and represents a dividend payout of about 39% for FY17. The stock has corrected 8.5% since our last report and we see sufficient upside to upgrade our rating to BUY, based on an unchanged FV of S$3.51 (13.5x blended FY18/19 earnings).

BreadTalk Group

A Special Ang Pow For The Lunar New Year

SP 2017 was an awesome year for BreadTalk. Excluding gains from the divestment of investment properties, its full-year core profit came in at SGD17.7m, an improvement of >100%. In view of the strong results, the company announced an additional special dividend of SGD0.01/share on top of the final dividend of SGD0.02/share. We maintain our BUY call but think that there could near-term slowdown in earnings growth as the company is now back on its capex expansion phase. We revise our TP to SGD2.00 (from SGD2.09, 14% upside).

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DBS VICKERS

Sembcorp Marine

Look beyond weak near-term earnings

Maintain BUY; TP reduced to S$ 2.90 after earnings revisions, still based on higher 2.4x FY18 P/BV multiple (0.5SD below mean). We continue to like SMM as a key proxy to the recovery in the O&G and O&M sectors, with strong order wins as key re-rating catalyst. Though, in the near term, we reckon that sentiment might be adversely affected by the wider-than-expected losses in 4Q17; and the M&A premium, which we estimated to be ~40 Sct. This could be given back if privatisation rumour is off the table.

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