| PHILLIP SECURITIES |
MAYBANK KIM ENG |
|
Micro-Mechanics (Holdings) Ltd Getting paid to wait
SINGAPORE | TECHNOLOGY | 4Q19 RESULTS 4Q19 revenue and PATMI were below our expectations. Gross margins suffered from weaker volumes and the higher fixed operating cost than a year ago. Final dividends were maintained at 6 cents in 4Q19. FY19 DPU is S$0.10. Free-cash flow is at a record high despite the decline in earnings. We marginally lowered our target price to S$1.60 (previously S$1.63). Our FY20e earnings have been reduced by 5%. We peg our valuations to 15x FY20e PE, in-line with back-end semiconductor supply chain valuations. The downturn in back-end semiconductor volumes is at the late stage. Based on the past cycles, a rebound should be materialising from the December quarter onwards. Investors are paid a 6% yield as they wait for the recovery. Our NEUTRAL recommendation is unchanged.
|
Prime US REIT (PRIME SP) Diversified Office Landlord
Steady income growth, initiate at BUY Prime US REIT (PRIME) offers investors exposure to a diversified portfolio of US office properties with steady income growth potential, in our view. Its asset quality, geographical diversity, tenancy profile and capital management are comparable to if not better than its closest S-REIT peers. We believe its distributions are well-supported by a favourable debt profile and efficient tax structure, which minimises cash taxes payable. We initiate at BUY with a DDM-based TP of USD1.00, implying a 19% total return. Key risks are: 1) adverse changes to its US REIT status; 2) changes to tax regimes; and 3) deterioration in US office sector fundamentals.
|
|
RHB |
CGS CIMB |
|
Sembcorp Marine (SMM SP)
Early Signs Of Order Win Recovery Maintain BUY with lower P/BV-based SGD1.63 TP, from SGD1.80, 43% upside. SMM announced it has won a raft of new projects valued at SGD400m, including engineering solutions for offshore gas and wind farm developments, and upgrades for cruise ships. Including SGD175m of new contracts secured in 1H19, we believe our assumption of SGD1bn new orders in FY19 is achievable. We forecast FY20 contract wins of SGD2.5bn, which should catalyse the share price higher.
|
CSE Global Taking on extra Volta(ge)
■ We were not surprised by CSE’s acquisition of Volta LLC given that it is continuously looking out for value accretive and strategic buys to grow. ■ We view this deal positively as it expands CSE’s depth in the onshore oil and gas market, and deal valuations were fair at an FY19F P/E of 4.3x. ■ Maintain Add with a higher TP of S$0.68 to account for the acquisition.
|
Check out our compilation of Target Prices
