 CIMB analysts: William Tng, CFA (left),Roy Chen, CFA & Ngoh Yi Sin |
Top growth pick 1: Cityneon
Cityneon’s 1H16 core net profit outperformed, at 82% of our FY16 forecast, thanks to its Victory Hill Exhibition (VHE) acquisition. We forecast core EPS growth of 109% for FY17 and 28% for FY18, driven by the launch of the Transformers’ exhibition in Las Vegas. Wining a third set of licensing rights would be a re-rating catalyst. Execution missteps and exogenous threats such as impact from terrorist attacks are key risks.
 @ Dutech's factory in Nantong: Row after row of semi-assembled ATMs. Inside them are safes made by Dutech. NextInsight file photo.Top growth pick 2: Dutech We believe that Dutech will deliver stellar FY16 earnings performance, with potential record-high net profit, driven by Rmb weakness, low raw material prices and contribution from Krauth. Balance sheet remains strong, with net cash (mostly in US$) at ~26% of its market cap at end-2Q16. M&As and potential new order wins from customers are key drivers. Dutech also offers 2.1% FY16-17 dividend yield. |
Top growth pick 3: Sarine Tech
After a washout year in 2015, industry dynamics have normalised and Sarine Tech now expects 2H16 earnings to be better than that of 1H16. In its traditional core business of diamond-manufacturing tools, Sarine Tech remains the only viable player in the industry. Its efforts to develop a new earnings stream in the polished diamond trade is also gaining traction. The potential success of this earnings engine over the next few years would cause the stock to re-rate, in our view.
 UMS manufactures components and systems for semiconductor equipment. Photo: Company Top dividend pick: UMS |
Maintain Reduce on Yoma
Yoma continued to experience sluggish residence sales, which led to core net loss of US$8m in 1QFY3/17. Yoma’s huge property investment in Star City and PHGE could take 20-30 years to be fully sold. Its other non-property businesses are still small and offer limited profit contribution. We maintain our Reduce call on Yoma, which trades at 1.5x FY17 P/BV against ROEs of just 2-4% over FY18-19F.
Full report here.
