ANALYSTS SAY: Buy, Sell, Hold (14 Apr)

LIM & TAN

Sembcorp Marine (SMM SP)
Share Price Catalysts Still In Play; Increase Target Price To S$0.13

SMM’s share price has seen stellar performance this year, rising 42% ytd. We believe that there remain catalysts for the stock to continue its re-rating, with disclosure of merger terms with Keppel Offshore Marine and new order wins being the main nearterm ones. In our view, SMM is a turnaround story with its recent large order win possibly presaging more positives on the new order win front, especially in the renewables sector. Maintain BUY. Raise target price to S$0.13 (S$0.11 previously).

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Excelpoint (S$1.79, trading halt) and WT Microelectronics Co., Ltd (WT) announced that WT, through its wholly owned subsidiary WT Semiconductor Pte. Ltd. (“Acquiring Entity”), and Excelpoint have entered into a definitive agreement pursuant to which WT, through the Acquiring Entity, will acquire 100% equity in Excelpoint by way of a scheme of arrangement (“Scheme”) at a cash consideration of S$1.93 per Excelpoint share.

At S$1.79, market cap of Excelpoint is S$209.4mln, FY21 P/E is 6.3x, current P/B is 1.4x and dividend yield is 4.9%. Given that we opine that the cash consideration of S$1.93 by WT is reasonable as it values Excelpoint at 1.6x P/B and 7x P/E while this offer price also exceeds all the traded market prices of Excelpoint in at least the last ten years of trading, we thus recommend investors to “VOTE IN FAVOUR” of the scheme of arrangement.

LIM & TAN

LIM & TAN

Keppel Corporation Limited / KCL ($6.62, up 0.08) refers to: (a) the media release dated 1 October 2013 with respect to two jackup orders from an affiliate of Clearwater Capital Partners, out of which one of the rigs worth about USD$200million remains undelivered; and (b) the media release dated 13 February 2014 with respect to contracts to build three high specifi caƟ on KFELS B Class jackup rigs for Fecon InternaƟ onal Corp worth about USD$650 million, (such contracts, “Relevant Contracts”).

Given the elevated oil prices, we believe that KCL will have no issues re-selling the 3 high specification KFELS B Class jack-up rigs to another buyer. At $6.62, KCL is capitalized at $11.9 billion and trades at 13.8x forward PE, 1x book and 4.98% dividend yield. Bloomberg consensus 12 months target price of $6.85 implies a potential upside of only 3.5%.

We highlight the key points from Q&M Dental’s ($0.525, up 0.5 cent) FY 2021 annual report:

In the financial year ended 31 December 2021 (“FY2021”), the Group delivered a strong financial performance across all its business segments. Q&M increased overall revenue by 49% from $137.6m in FY2020 to $205.6m in FY2021. Profi t aŌ er tax was $39.4m up 98% from FY2020. The group recorded its highest-ever revenue of S$205.6 million, with S$39.4
million profit after tax. These represented a year-on-year increase of 49% and 98% respecƟ vely. This is the best set of financial results in Q & M’s history. 

Capitalized at $496mln, Q&M currently trades at 16.4x forward PE and 5.0x PB, with a dividend yield of 7.6%. Consensus target price stands at S$0.74, representing 40% upside from current level of 52.5 cents. We thus maintain an “Accumulate” rating on Q&M Dental.