Excerpts from analyst's report
CIMB analyst: William Tng, CFA
| ♦ Best World -- still early in the upcycle | ||||
 Taiwan distributors of Best World in an upbeat mood in March 2016. Photo: FacebookBest World’s 1Q16 was way above our expectations on a very strong showing in Taiwan. 1Q net profit formed 37% of our full-year forecast.
At the same time, we also think it is only the tip of the iceberg with regards to its China business potential. 1Q is seasonally the weakest quarter and even without the direct selling licence in China, we believe earnings can be 16-21% higher than our original forecasts. |
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| ♦ mm2 -- teeming with growth plans | ||||
We initiated coverage with an Add recommendation and TP of S$0.70, based on a CY17 P/E of 22.0x, backed by a 3-year forecast EPS CAGR of 28.8%. |
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| Stock worth highlighting 1 -- Dutech Holdings |
 Among Dutech's range of products are gun safes which are sold to the US market. NextInsight file photo.Dutech Holdings is Asia’s largest safe producer, supplying 60-70% of the safe demand from Diebold and Wincor Nixdorf, the world’s number 2 and number 3 ATM suppliers that collectively have 30-40% share of the global ATM market.Dutech reported a 21% yoy increase in its 1Q16 results, benefitting from lower steel prices (its key raw material). Dutech believes that it can win more orders post the merger of its customers Wincor and Diebold. The company declared a dividend of 1Sct and trades at 0.89x historical P/BV. |
Stock worth highlighting 2 – Nera Telecoms
Nera Telecoms has announced that it is currently at an advanced stage of discussion with a third party on the possible disposal of its payment solutions business. Given that the major shareholder of Nera is a private equity fund, a special dividend following a successful sale is not unexpected.
This could also mean that Nera will once again be a network and telco solutions specialist with a business that is less capital intensive. Hence, a return to its high dividend payout ratio is a very likely outcome.
Full report here.
