Excerpts from RHB Research report

After a long hiatus, we mark Billion&Below’s (B&B) return with a quarterly update and new remodelled portfolio. The mandate stays the same: to invest in quality small-mid cap names in Singapore with great potential in delivering positive returns.

 

Price (S$)

Target

% Upside

P/E
Dec-18F

P/B Dec-18F

Yield (%) Dec-18F

GSS Energy

0.15

0.25

62.3

11.0

1.6

1.8

HRnetGroup

0.86

1.14

32.6

17.9

2.6

2.8

ISOTeam

0.36

0.42

18.3

13.1

0.7

1.9

Kimly

0.36

0.43

21.1

18.5

4.7

2.7

Moya

0.10

0.15

57.9

9.6

1.8

--

Silverlake
Axis

0.56

0.65

17.1

23.7

4.0

4.9

Valuetronics

0.85

0.96

13.6

8.9

1.6

5.6

Source: Company data, RHB


After a long hiatus, we mark Billion&Below’s (B&B) return with a quarterly update and new remodelled portfolio. The mandate stays the same: to invest in quality small-mid cap names in Singapore with great potential in delivering positive returns.

2018 Top 20 Jewels – how did they fare? April was not a good month for the small-mid cap sector, with the FTSE ST Small Cap Index (FSTS) declining 4.3% since 9 Mar. This was the closing price for the jewels in our Small Cap Book 2018. We have tracked the performance of our jewels since then, and their performances have been rather disappointing – interest within the Singapore market is still focused towards large caps. Out of the 20 jewels, 20% have fared better, with Japfa, HRnetgroup and Yoma Strategic leading the gains. The biggest declines are seen in APAC Realty, Avi-Tech Electronics (Avi-Tech) and Asian Pay TV Trust.


Model Portfolio

Price (S$)

Quantity

Value (S$)

GSS Energy

0.152

1,200,000

182,400

HRnetGroup

0.83

350,000

290,500

ISOTeam

0.35

300,000

105,000

Kimly

0.35

300,000

105,000

Moya

0.095

1,000,000

95,000

Silverlake Axis

0.55

240,000

132,000

Valuetronics

0.83

100,000

83,000

Cash

   

7,100

Total

   

1,000,000

Model Portfolio – what are the new names and why? With a starting portfolio size of SGD1m, we have an initial 1.2m position in GSS Energy (GSS) at SGD0.152/piece.

We remain optimistic on its prospects and expect many potential catalysts to come in the near future, both in the precision engineering (PE) and oil & gas segments.

A 350,000 position on HRnetGroup at SGD0.83 a piece is also added, as we like its strong PATMI growth as shown in 1Q18.

oilwell8.14GSS Energy is expected to reap first revenue soon from its oil production in Indonesia.This is coupled with a SGD290m net cash balance sheet for potential incoming acquisitions to further boost PATMI.

We continue to like ISOTeam despite a weak quarter, and include a 300,000 position at SGD0.35/piece. Its orderbook remains at a healthy SGD84.4m level, with ISOTeam still expecting to add to this with a few larger project tender results, which are to be announced over the next few months.


We are more positive on the consumer sector this year, especially on defensive consumer names like Kimly, with its rich cash flow generation. We have added 300,000 shares in the group at SGD0.35/share. Kimly has also reported a positive 2Q18. We think the new outlets it invested in during 2017 – and those coming up in 2018 – are likely to be profitable in 2019-2020. In addition, with M&As in the pipeline, we believe that growth will be exciting in the coming years.

For Silverlake Axis, we have added 240,000 shares at SGD0.55/share, as we believe the removal of the GST will be positive to its margins going forward. In addition, we believe that this should be its earnings cycle’s bottom, as the company has managed to clinch new key banking projects in the last few months. These have bumped up Silverlake Axis’ orderbook quite significantly to >MYR380m, which ought to result in strong earnings growth in FY19-20.

For Valuetronics, we add 100,000 shares at SGD0.83/share, as we think the sell-down is overdone, as its fundamentals and growth remain intact. In addition, with the trade war between the US and China seemingly solved, prospects will be bright for Valuetronics.

Full report here. 

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Share Prices

Counter NameLastChange
AEM Holdings4.010-0.030
Avarga0.330-0.010
Avi-Tech Electronics0.485-0.005
Best World Int.1.360-
CEI1.150-
China Sunsine0.485-
CNMC GoldMine0.2750.005
CSE Global0.5000.020
Food Empire0.760-0.025
Golden Energy0.165-0.003
GSS Energy0.0630.004
ISDN Holdings0.735-0.005
ISOTeam0.129-
IX Biopharma0.2700.005
JB Foods0.560-
KSH Holdings0.360-
Medtecs Intl1.110-
Moya Asia0.0770.004
Nordic Group0.250-
Oxley Holdings0.225-0.005
Procurri0.325-0.010
REX International0.154-
Riverstone1.5000.010
Roxy-Pacific0.3600.005
SingMedical0.3450.010
Sri Trang Agro1.3700.040
Straco Corp.0.575-
Sunningdale Tech1.6200.060
Sunpower Group0.9700.015
The Trendlines0.096-0.001
UG Healthcare0.7400.025
Uni-Asia Group0.6150.005
Yangzijiang Shipbldg1.060-

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