buy sell hold 2021

UOB KAYHIAN LIM & TAN

Trans-China Automotive Holdings (TCAH SP)

A Premium Drive Gearing Up For The Fast Lane

 

TCA is a premium automobile dealership group mainly operating in China’s affluent Greater Bay Area. The company carries well-established automobile brands such as BMW and McLaren, riding on the strong demand for premium automobiles and the line-up of electric vehicles slated for launch. Initiate coverage with BUY and a target price of S$0.39.

 

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Koufu ($0.69, unchanged) provided an update to shareholders on the impact of the COVID-19 pandemic on the Group’s operating environment.

With the economy in a P2HA alert level, the Group’s business operations in food courts, coffee shops and restaurants have been impacted with lower fooƞ alls in the malls, offices and tertiary institutions.

Despite the prohibition of dining-in at food outlets, Koufu remains open for takeaways and deliveries during those periods. Sales for takeaway kiosks business i.e. Dough Culture and R&B Tea increased as a result of the prohibition of dining-in. To support the F&B sector during the periods where dining-in was prohibited, the support under the Jobs Support Scheme was enhanced to 60% instead of the iniƟ al 10% from 22 July to 18 August 2021 before reverting back to 10% thereafter and further enhanced to 25% from 27 September to 21 November.

 

Koufu’s market cap stands at S$381.5mln and currently trades at 20.3x forward PE and 3.6x PB, with a dividend yield of 2.5%. Consensus target price stands at $0.73, representing 5.8% upside from current share price. As Covid-19 headwinds conƟ nue to weigh in on Koufu’s core operaƟ ons, we are unlikely to see earnings recovery in the short run and as such, we have a HOLD recommendation till the situation improves.

LIM & TAN

DBS VICKERS

Nera Telecommunication / Nera Tel ($0.135, up 0.7 cents) has seen a gradual uptick in order intake with the progressive global economic reopening. This will have a positive effect on business, as most countries have adopted a “living with COVID” strategy. The management team is also encouraged to see more opportunities and leads from all three business segments. During the quarter, the marketing team secured a contract of approximately $6.0mln to provide Fibre-to-the-Home infrastructure network equipment for a major service provider in South East Asia as demand for work-fromhome arrangements remains high.

Capitalized at S$48.9mln, Neratel is currently loss making and trades at 0.8x PB, with a yield of 3.7%. There is currently no brokers covering this counter.

 

Q & M Dental Group

Strong growth momentum in core dental business

 

Investment Thesis: Maintain BUY with lower TP of S$0.80, implying potential upside of 32%. We lower our FY21F/FY22F earnings forecasts for Q & M by 5.3%/6.7% as we cut our COVID-19 PCR testing projections; the EPS CAGR over FY20-23F stands at 30.5%. FY21F valuations remain undemanding at 15x PE (c. 1 SD below five-year average) with an attractive yield of 6.1%, as Q & M has continued to pay a quarterly dividend of 1 Sct even after the bonus issue.

 

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