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AEM Holdings (AEM SP)

Buy the dip


Capturing upside opportunities; TP +19%; BUY AEM raised FY20 revenue guidance to SGD480-500m from SGD460-480m. We raise FY20-22E EPS by 5-7% to account for this. We now value AEM at 14x FY21E P/E, from ROE-g/COE-g derived 5x blended FY20-21E P/B, to better account for: i) upside from system-level test’s structural growth prospects from new customers/ stronger-than-expected order momentum; and ii) potential for valuation gap to narrow against global peers due to increasing international investor participation. BUY.


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Fu Yu Corp Ltd

Looking forward to growth again


■ 1H20 revenue fell 26.0% yoy due to production disruptions and weaker demand arising from the Covid-19 pandemic.

■ As at end-Jun 2020, net cash formed 56.2% of Fu Yu’s market cap.

■ With the rightsizing of its loss-making China operations nearly completed, we expect its net profit to grow again. Reiterate Hold with a higher TP of S$0.24.


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Singapore F&B and Retail malls
The New Norm – Shopping and dining at your convenience


• COVID-19 has resulted in the sharp decline in F&B Foodservice sector. This has led F&B Foodservice businesses in Singapore to rethink and re-strategise their Foodservice offering and the way they compete.

• With safe distancing, circuit breaker, working from home, absence of tourists and commensality on hold, demand is not expected to recover to pre COVID-19 levels anytime soon at least until a vaccine is found. For now, businesses will have to contend with a new norm of lower sales and margins, with higher end F&B under more pressure as opposed to lower to mid end F&B demandt demand is assumed to return.

• Retail landlords introducing new e-concepts to capture consumer mindshare, malls with dominant characteristics will pull ahead and remain relevant in the future retail ecosystem.

• As safe distancing and movement is minimised, we favour F&B stocks that are serving the low to midrange segment, and retail malls in the suburban areas. Top stock picks are Koufu, CMT and LREIT. We are not positive on Jumbo, SPH REIT and SGREIT.


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Singapore Banks

Life after moratoriums


 Moratoriums offered by Singapore banks expire towards year-end; restructuring and rescheduling are key

 Extension of moratoriums likely on a targeted basis going forward, if any

 Extension of divide


• With tourist F&B demand at 24% of F&B Foodservice retail sales, we project a slow recovery to preCOVID-19 levels only in 2022 when touris

nd cap beyond FY20F a possibility

 Singapore banks’ valuations remain inexpensive


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LionelLim8.16Check out our compilation of Target Prices