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MAYBANK KIM ENG |
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SATS (SATS SP) 4QFY20: S$51m In Credit And Impairment Provisions; Guides For Lower Loss In 1QFY21
Notwithstanding the guidance for lower loss in 1QFY21, we now believe SATS’ earnings would be under pressure for a long while due to heavy exposure to the aviation segment. SATS has shored up its balance sheet with S$500m in new debt in 4QFY20 and 1QFY21, which we believe could be a stop-gap measure to fund working capital. Maintain HOLD. Target price: S$2.93. Suggested entry price: S$2.60.
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Frencken Group Ltd (FRKN SP) Upping in quality
Quality growth, diversity and margins; initiate BUY Frencken manufactures components and modules for market leaders leveraged to growth trends in 5G/ AI, health and wellness and population aging. Our FY21-22E PATMI are 14% higher vs. Bloomberg consensus, as we believe margin uplift potential from a breadth of new products with higher design content is underappreciated. Geographic and product diversity, as well as net cash-to-equity position of 23% should offer resilience amid Covid-19. Initiate BUY with ROE-g/COE-g TP of SGD1.20 (1.6x FY20E P/B).
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Check out our compilation of Target Prices