ANALYSTS SAY: Buy, Sell, Hold (16 Aug 2017)

CITYNEON HOLDINGS (CITN SP)

1H17: Results In Line; Intellectual Property Driving Growth

Cityneon’s 1H17 results were in line with our expectations. The intellectual property (IP) division continues to drive growth. With the general offer from Lucrum 1 to close on 29 Aug 17, we expect Cityneon to be on a firmer footing with Ron Tan, Cityneon’s CEO, to have more influence on the strategy and direction of the company. The company is in talks to acquire a new IP rights. Maintain BUY and SOTP-based target price of S$1.28.

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Nam Lee Pressed Metal Industries

Stable yield play

SINGAPORE | INDUSTRIALS | 9M17 RESULTS

 9M17 revenue met 71.3% of our full year forecast

 9M17 PATMI met 80.6% of our full year forecast

 Revised our FY17e and FY18e revenue and cost assumptions

 Maintain Buy; lower target price of $0.51 (previously $0.52)

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Singapore Medical Group (SMG SP)

Just What the Doctor Ordered

Strong lift from acquisition and organic growth 1H17 earnings were in line, at 42% of our FY17E. Core EPS grew c.350% YoY, from a major acquisition and organic growth. Expect better 2H from: 1) full 2H contributions from two major acquisitions completed in 2017; 2) better organic growth from hiring two new specialists and a new diagnostic centre; and 3) seasonally stronger 2H. SMG aims to drive growth by hiring more specialists, better overseas operations and more acquisitions. Maintain BUY and TP of SGD0.78, based on 27x FY18E EPS (average of 2-year forward mean of small-cap healthcare peers in Singapore).

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Midas Holdings: Cautious amid signs of recovery

Midas Holdings Limited’s (Midas) 2Q17 revenue jumped 32.1% YoY to RMB505.6m, mainly due to the consolidation of results of its recently acquired business and higher business volume at its core business. Coupled with a 43.5% YoY decline in income tax and improvement in margins, 2Q17 PATMI surged 197.1% to RMB55.5m. For 1H17, PATMI jumped 193.8% YoY to RMB84.3m, forming 79.3% of our FY17 forecast. Looking ahead, we expect core business to pick up on higher orders but forecast overall GPM to fall to ~28-29% with full year contributions from its Aluminium Alloy Stretched Plates business. We believe Midas’ share price performance still largely hinges on the execution of its new business – JMLA, which we do not expect to ramp up until FY18, at the earliest. In our view, the key to JMLA’s success is dependent on the automobile industry’s adoption of aluminium instead of steel for car manufacturing, which has no clear visibility over the timeline. While we raise our FY17F/18F PATMI by 33%/49% on above expectations results, we lower our target peg from 0.6x to 0.5x FY17F P/B given the uncertainty over JMLA. Consequently, our FV decreases from S$0.245 to S$0.225. Maintain HOLD.

Procurri Corporation Limited

Earnings visibility unclear Disappointed by core organic business and acquisitions.

We are disappointed by Procurri’s core organic business (IT Distribution and Lifecycle Services) as the company struggles to replace revenue arising from the loss of a major customer. On the acquisitions front, we had expected ~S$2m earnings contribution in FY17. However, due to cost issues related to EAF and Rockland JV coupled with slower than expected organic business, Procurri may be barely profitable in FY17F and any meaningful recovery is only possible in FY18F.

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