Excerpts from UOB Kay Hian report

Staying the course; sticking with the fundamentals. Our recent addition, Sunningdale, declined 9.2% mom but it looks oversold. In view of this, a firm US dollar and expected recovery in 2Q18, we reiterate our BUY call on Sunningdale.

CSE saw profit-taking in June (-6.5% mom) but is still offering positive returns of 4.9% since being added to our alpha picks.

CSE remains our preferred proxy to the firm oil prices as we remove Keppel Corp due to the lack of near-term catalysts for the latter.



khooboohor kohboonhwee4.16CEO Khoo Boo Hor with non-executive chairman Koh Boon Hwee. NextInsight file photoSunningdale – BUY (Yeo Hai Wei)

Oversold. The stock has retraced 33% from its recent high and is currently trading at 0.7x P/B and at 7.7x 2018F PE, which is significantly cheaper than its peers, including Memtech.

Hoping for a better 2Q18 to provide relief. Investors have been shaken by a weak 1Q18, exacerbated by forex losses.

We expect a seasonally better 2Q18 and the potential for a forex gain in 2Q18 as the US dollar has gained 1.9% vs the Singapore dollar.

Sunningdale

Share price: 
$1.29

Target: 
$2.00

Price currently below major shareholder’s last purchase. After the price retracement, Sunningdale is trading at an 18% discount to the last acquisition price of S$1.71 (13m shares) by its chairman Koh Boon Hwee.

Share Price Catalyst
• Event: Recovery in 2QFY18 earnings and gains from disposal of its non-core asset.

• Timeline: 3-6 months

CSE Global – BUY (Yeo Hai Wei)

CSE

Share price: 
42.5c

Target: 
61c

Solid proxy on recovering oil prices. CSE is a good proxy on recovering oil prices as two-thirds of its existing orderbook of S$175m comes from the O&G sector. In addition, the stock offers sustainable dividend yield of more than 6%.

High entry barriers. The group has a 32-year track record in a business with high entry barriers. CSE is one of the few qualified system integrators in the region for O&G and communication infrastructure industries.

Potential synergies from new shareholder. Serba Dinamik, a Malaysian-listed company, recently bought a 25% stake in CSE at S$0.45/share. We see potential synergies as it could open up new markets for CSE such as Malaysia and Middle East.

Share Price Catalyst
Event: New contract wins and continued recovery in earnings.


Full report here. 


Share Prices

Counter NameLastChange
AEM Holdings0.7350.005
Alliance Mineral0.2600.010
AusGroup0.041-0.001
Avi-Tech Electronics0.3550.015
Best World Int.1.390-
China Sunsine1.0800.070
DISA Limited0.008-
Dutech Holdings0.250-
Federal Int. (2000)0.270-
Food Empire0.5700.010
Geo Energy0.230-
Golden Energy0.250-0.005
GSS Energy0.125-0.001
Heeton Holdings0.510-0.005
ISOTeam0.280-
KSH Holdings0.555-
Lian Beng Group0.5150.005
Miyoshi0.054-
Nordic Group0.460-
Oxley Holdings0.330-
REX International0.109-0.001
Riverstone1.1700.010
Roxy-Pacific0.4000.005
Serial System0.145-
Sing Holdings0.3950.005
Sino Grandness0.196-0.004
Straco Corp.0.735-
Sunningdale Tech1.4000.040
Sunpower Group0.550-0.015
The Trendlines0.110-
Tiong Seng0.315-
Trek 2000 Int.0.095-
Uni-Asia Group1.300-
XMH Holdings0.220-
Yangzijiang Shipbldg1.160-

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