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Frencken Group (FRKN SP)

One-Off Does Not Impact a Positive Outlook; Keep BUY


 Maintain BUY with a higher DCF-derived SGD1.37 TP from SGD1.22, 11% upside and c.3% yield. Frencken announced that it would take an impairment loss of SGD6.2m associated with the development of a product in the healthcare industry due to a strategic direction change by its customer to not launch the product. Management revealed that the incident does not impact the future outlook of its medical segment as it did not project any revenue from this product and the impairment is a non-cash item.


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Auto & Autoparts

Ending The Year With a Bang; Keep OVERWEIGHT


Keep OVERWEIGHT; Top Pick: DRB-HICOM. The Malaysian Automotive Association (MAA) reported a November TIV of 56,489 units, with almost all key brands reporting YoY stronger sales volumes despite the COVID-19 cases spike. We raise our 2020F TIV to 510,000 units, as we expect industry sales to sustain at the c.56,000 units/month level in December. No change to our 2021F TIV of 580,000 units (+16% YoY). The launch of several volume modes mark a major car replacement cycle in the industry, which should boost TIV.


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Advancecon (ADVC MK)

Overlooked Potential In Earthworks 


YR0.44 FV based on 11.7x 2021F P/E. We believe Advancecon is an early beneficiary of the construction sector up-cycle, being a strong advance works player. As reaffirmed by the Government, we foresee more opportunities surfacing from the roll out of infrastructure packages next year. Given its niche expertise, prominent earthworks services market share, and healthy MYR714m orderbook, ADVC could potentially trade at a higher multiple of 11.7x P/E which is at a 10% discount from the 5-year mean.


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