LANTROVISION: @ Compelling 4.2x ex-cash FY15F PE

Excerpts from analyst's report

UOB Kay Hian analyst: Loke Chunying

Lantro.pic_8.14 Lantrovision -- an investment proxy to the increasingly smart world with the rise in data centres, cloud computing and network of sensors. Photo: CompanyProxy To The Increasingly Smart World

INVESTMENT HIGHLIGHTS

• The rise of data centres in Singapore. According to BroadGroup, data centre space in Singapore has grown at a 2007-13 CAGR of 11.1% to almost 1.8m sqft, with utilisation remaining consistently at about 85.5%.

To strengthen Singapore’s position as an economic and infocomm hub, the Infocomm Development Authority of Singapore (IDA), Singapore Economic Development Board (EDB) and JTC Corporation have plans to develop a data centre park (DCP) which is estimated to consist of 6-8 data centre buildings providing up to 105,000 sqm3 (1.1m sqft) of data centre rackable space, targeted to be operational in early-16.

• Mushrooming data centres. In Jul 14, 1-Net Singapore announced the launch of a new data centre, 1-Net North, which is expected to be completed by 4Q15. In Dec 14, a subsidiary of PT Telkom was awarded the first plot of land at Singapore’s Data Centre Park for the development of a data centre and telecommunication hub. In Mar 15, Singapore Technologies Telemedia (ST Telemedia) acquired land at Defu Lane to build its flagship data centre facility in Singapore.

• Proxy to the region’s data centre boom. According to IDC’s 2014 Asia/Pacific (excluding Japan) Data Center Index, Hong Kong, Singapore and Taiwan are among the top 3 most suitable locations in Asia for setting up new and outsourced data centres. With 64% of its FY14 revenue being derived from Singapore, Hong Kong and Taiwan, we see Lantrovision as a potential beneficiary to the region’s data centre boom.

Stock price (10 Apr 2015)	49.5 cents
52-week range	39 – 68.5 cents
PE (ttm)	10.6
Estimated P/E (6/2015)	9.9
Market cap	S$134 million
Price/book	1.2
Dividend yield Bloomberg data	6.12%

• Net cash position forms 60% of market cap. As at 31 Dec 14, Lantrovision had a net cash position of S$77m (S$0.28/share) representing about 60% of its current market cap.

• Recent price correction provides attractive buying opportunity. We see Lantrovision as an investment proxy to the increasingly smart world with the rise in data centres, cloud computing and network of sensors.

Serving primarily the IT and finance sectors, Lantrovision’s customers comprise mostly of global MNCs and major banks in the region such as Microsoft and American Express. Trading at a compelling ex-cash PE of 4.2x with a FY15F dividend yield of 4.6%, we believe Lantrovision offers good value at current levels.

VALUATION

• Maintain BUY with a target price of S$0.655. At its current price (46.5 cents), Lantrovision is trading at 10.9x FY15F PE and a compelling 4.2x ex-cash FY15F PE, with a FY15F dividend yield of 4.6%.

Full report here.

LANTROVISION: @ Compelling 4.2x ex-cash FY15F PE

You may also be interested in: