Excerpts from CGS-CIMB report.
| Yangzijiang Shipbuilding (ADD, TP: S$1.45) ● YZJ expects its order for 2019 to be close to US$2bn, although it has only done US$696m YTD. We believe there could be some new contracts in the pipeline.  Ren Yuan Lin is expected to return soon to his Chairman job at YZJ. NextInsight file photoWe keep our US$1bn order forecast intact for FY19. Order book stands at US$3.18bn for 83 vessels. ● There is newsflow of M&As among the Singapore yards, so interest could return to YZJ as it is trading at a significant discount despite firmer earnings and stronger balance sheet. ● It is trading close to 5-year trough of 0.7x CY19F P/BV, a discount to Singapore yards (1.2x). Catalysts are stronger orders and the chairman returning to duty. |
AEM Holdings Ltd (ADD, TP: S$2.12)  Executive Chairman Loke Wai San. NextInsight file photo● Positive earnings momentum into 1H20; our channel checks suggest that AEM has leased new factory space to cope with stronger demand. ● We expect more orders from Intel as it tries to catch up with competition. ● New product launch (hybrid Test Handler) could help drive FY20 earnings. ● Key risk is mainly 97% revenue dependence on Intel. |
CSE Global (ADD, TP: S$0.73)  MD Lim Boon Kheng. NextInsight file photo ● We are excited about CSE’s earnings growth potential, given its padded order backlog of at least S$300m by end-2020 (end 3Q20: S$232.6m). ● Though acquisitions within the year may have swung the balance sheet to a net debt position, we are still positive on them as they have broadened CSE’s regional reach or have been earnings accretive. ● The stock trades at FY20F P/E of 10.4x, below its 5-year average. Re-rating catalysts/downside risks include higher- /lower than-expected order wins and GP margins. |
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