Excerpts from CGS-CIMB report
Analyst: William Tng, CFA
As at end-Dec 2019, Sunningdale had a negligible net debt position of S$1.0m.
In FY19, the group generated net cash from operations of S$47.5m and capital expenditure was S$34.6m.
|Will Sunningdale cut dividend?|
Sunningdale does not have a formal dividend policy.
Dividends are declared after considering the level of available cash, capex plans and return on equity and retained earnings.
Over FY15-17, Sunningdale raised dividends as profitability improved.
Given a more challenging FY18-19 (trade war between the US and China and slower economic growth), Sunningdale maintained its DPS at 8 Scts for both FY18 and FY19.
Sunningdale’s free cash flow per share for FY19 was 6.7 Scts while depreciation per share was 16.2 Scts.
|Valution and recommendation|
Earnings cut by 6.2-9.1%
We cut FY20F sales by 7.3% to account for the production disruptions/demand uncertainty arising from the Covid-19 outbreak.
While our segmental revenue growth forecasts for FY21-22F are unchanged (Figure 6), the lower base in FY20F leads to a negative 7.2% change in revenue forecasts for these two years.
EPS forecasts for FY20F/21F/22F are reduced by 9.1%/8.1%/6.2%.
Given our earnings cut, our FY20F BVPS falls to S$1.92 from S$1.93 previously.
During the GFC, Sunningdale’s share price troughed at S$0.75 in 2009.
The trough P/BV and trough P/E then were 0.445x and 8.2x respectively.
Based on our current forecasts, the possible trough prices for Sunningdale are S$0.85 and S$0.755 respectively.
During the GFC, Sunningdale slipped into a loss of S$97.5m in FY08 due to impairment charges and foreign exchange losses but returned to profitability in FY09.
Full report here.