The following 9 stocks are picks of NRA Capital and they were highlighted at a recent seminar organized by Lim & Tan Securities.
The powerpoint presentation from which the following text was taken can be accessed here. Read it to understand what are the drivers for the tech sector currently. Also, visit www.nracapital.com
Serial System
Share price: $0.115
Our fair value: $0.140 (upside potential 21%)
A major trader for semiconductors and electronic components
Largest distributor for Texas Instrument in China and Korea now
Demand for electronics components will continue to be driven from Asia -the current component shortages remain
Reasonable dividend yield at 4.3%
FY10F P/E of 8x, we see catalysts including the stronger than expected earnings from the more robust GDP numbers in Singapore and the region
Hisaka Holdings
Share price: $0.255
Our fair value: $0.40 (upside potential 58%)
Mechanical motion components provider
Beneficiary of the semiconductor equipment spending cycle
Medical and ECO divisions are also firing up
Order remain firms and supply is still tight
Expect sales to double this year
Debt free with net cash per share of 6 cts
Low FY10F P/E of 5.4x
ASTI
Share price: $0.10
Our fair value: $0.21 (upside potential 110%)
Semiconductor equipment manufacturer, comprising principally tape and reel services
Strong proxy to recovery semiconductor equipment cycle
Outstanding legal suits and inter-company loans weighing on stock but unjustified
Rebuilding its balance sheet
Low FY10F P/E of 3.6x and trading at only 0.6x P/B (NTA of 19.5cents)
Manufacturing Integration Technology
Share price: $0.150
Our fair value: $0.210 (upside potential 40%)
Semiconductor & Solar equipment manufacturer
To benefit from semiconductor equipment spending
Manufacturing activities picking up
Solar equipment market another avenue of growth
Expect FY10 revenue to double
Net cash per share $0.085
Trading at FY10F & FY11F Blended P/E of 6.1x
Kinergy Ltd
Share price: $0.090
Our fair value: $0.195 (upside potential 117%)
Semiconductor equipment EMS
Key customer, Kulicke & Soffa has delivered strong results
Ride on strong semiconductor capital equipment spending
Expect revenue to surge 109% in 2010
Has to watch its balance sheet, but sustained revenue should strengthen balance sheet
Trading at P/E of only 2.4x and P/B of 0.5x.
Broadway Industrial
Share price: $1.15
Our fair value: $1.62 (upside potential 41%)
Manufacturer of foam plastics for packaging and precision-machined components in Asia
All business engines are doing well:-
HDD component benefit from growing PC demand
Non HDD component benefit from Semiconductor equipment up cycle
Packaging division is also benefit from recovery in tech demand
Low FY10F P/E of 5x
Innotek
Share price: $0.535
Our fair value: $0.82 (upside potential 53%)
A precision metal component/stamping manufacturer
Strong proxy to Japanese electronics especially consumer products
Demand for large LCDs and LED are growing strongly
Attractive dividend yield at 9%
Trading at only 0.6x P/B (NTA of 87.7 cents)
Avi-Tech Electronics Ltd
Share price: $0.195
Our fair value: $0.210 (upside potential 7.7%)
Provides Burn-in services and Board Mfg for Semiconductor industry
Burn-in & Board Mfg to benefit from semiconductor recovery growth
Has been a laggard, dragged down by engineering services segment
Net cash per share of $0.128
Stripped of net cash, trading at FY10F P/E is only 4.9x
Good dividend yield of 5.2%
Potential M&A opportunities
Riverstone Holdings Ltd
Share price: $0.55
Our fair value: $0.76 (upside potential 38%)
Supplies cleanroom gloves to HDD & Semiconductor industries
1Q10 net profit grew 475%
Capacity to reach 1.85bil gloves by end FY11.
Expect EPS to surge 38.4% in FY10
Strong operating cashflow and balance sheet
net cash of RM50.7mil