Excerpts from CIMB’s report released yesterday afternoon….
Rising tide lifts all boats – Get on one now before it’s too late
• With the STI hitting a 2-year high yesterday, we believe it won’t be long before investors, punters and traders focus their attention on value small to mid cap stocks.
• We have identified two attractive small to mid cap “boats” that you might like to board.
• Impressive jump yesterday. This mid cap gem gained 22% from S$0.045 to S$0.055 yesterday on strong volume, earning its place on the Top 20 most traded chart as well as the Top Gainers chart.
• Still undervalued. In spite of the 22% jump, BLTA is still trading at 0.5x P/BV, a discount to its peer average of 0.8x P/BV.
• Near term catalyst. BLTA managed a turnaround with a small core net profit of US$1.1m in 2Q10. We expect BLTA’s earnings to be boosted by strong investment income in the second half of this year. A positive 3Q10 results release in the next few weeks could signify an end to BLTA’s woes and could give BLTA’s share price a near term boost, in our view.
• Recommendation: Outperform with target price of S$0.09.
• Excellent 1HFY11 results. Cheung Woh released a solid set of 1HFY11 results two days ago. Revenues grew 28.5% yoy from S$52m to S$68m yoy, and net profit grew 74.4% yoy from S$5m to S$8.7m. The company also declared an interim dividend of 0.5 Scts.
• Good value still. Business for all product segments remains healthy. Cheung Woh appears to be gaining market share in the HDD component business, enabling the group to outpace industry growth. Its automotive component business has also been recovering in recent months, on the back of a gradual recovery of the Chinese auto sector.
• Recommendation: Buy with target price of S$0.56.
Recent story: CHEUNG WOH TECH: 'Momentum strong, no impact from Greek crisis'