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. We 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) ● 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) ● 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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