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AEM Holdings (AEM SP) 5G beneficiary
Key beneficiary of rising SLT trend; BUY System level test is gaining traction, due to rising complexity of chips, and the need to test mission-critical devices reliably. We continue to see AEM as a key beneficiary of this trend, on the back of its strong knowhow and track record in this area. We also see FY21E as a growth year, driven by new products across several customers. Maintain BUY and TP of SGD5.05 (14x FY21E P/E).
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Frencken Group Ltd (FRKN SP) Resilience and diversity
BUY for margin expansion potential We see Frencken as a proxy to growth trends in 5G/AI, health and wellness and population aging through its blue-chip customers. In the short term, semiconductor equipment/analytical/automotive endmarkets, which form around 70% of sales, should provide cyclical resilience. Longer-term, we are excited by margin growth potential from deepening value-add with customers as Frencken launches a breadth of products in coming years. Maintain BUY with ROE-g/COE-g TP of SGD1.39 (1.6x FY21E P/B).
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MAYBANK KIM ENG |
UOB KAYHIAN |
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Valuetronics (VALUE SP) Waiting mode
Earnings recovery delayed: HOLD, prefer VMS Plans by certain customers to switch US allocations to other supplies in North America/ ASEAN have been delayed due to Covid-19. This has in turn postponed VALUE’s earnings recovery – a key rerating catalyst, in our view. Maintain HOLD and TP of SGD 0.58 as we see the stock is fairly valued in the next 12 months. We prefer Venture (VMS SP, BUY, TP SGD23.27) as we believe it is at the cusp of an earnings upgrade cycle.
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Koufu Group (KOUFU SP) Business Update: Recovery In 2H20
SSS declined by 20% yoy in Jul-Oct 20, an improvement from 2Q20’s 40% yoy decline. Sales at outlets in the heartlands and full-service restaurants have improved significantly. However, outlets at the downtown, tertiary education and tourist spots remained impacted by low footfall. This would be partially mitigated by government grants in 2H20. Future growth drivers are contributions from Deli Asia, new outlets and gradual resumption of activities. Maintain BUY. Target price: S$0.73.
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