First Sponsor Group – China outlook turns cloudy
- 2H21 profit of $61.8mn was above our estimates, at 53.6%. The beat came from property development (PD) and property financing (PF).
- Revenue from hotel operations showed nascent recovery as improvements in its European hotel operations lifted earnings pared back by weakness from its China operations due to the resurgence of COVID-19 in China.
- China outlook turns cloudy as PF and PD business impacted by the slowing property market and recent loosening of monetary policy. Dongguan inventory turnover rose to 12.5 months from 3.2 months previously.
- Downgrade to NEUTRAL due to slower economic growth in China with reduced SOTP target price of S$1.39. Catalysts for upgrade are a recovery in the Chinese property market and its China hotel portfolio.
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China Sunsine Chemical (CSSC SP)
2H21: Results Beat On Higher-than-expected ASPs
Sunsine recorded 2H21 net profit of Rmb241.1m (+77% yoy), taking 2021 net profit to Rmb506.3m (+131%), 14% above our estimate. Production volume continues to hit record levels from capacity expansion efforts, amid elevated ASP for rubber
accelerators owing to rising crude oil prices. While we have raised earnings expectations for 2022-23, our valuation peg has been reduced due to the rising interest rate environment. Maintain BUY with a target price of S$0.695.
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China Sunsine Chemical (CSSC SP)
2H21: Results Beat On Higher-than-expected ASPs
Sunsine recorded 2H21 net profit of Rmb241.1m (+77% yoy), taking 2021 net profit to Rmb506.3m (+131%), 14% above our estimate. Production volume continues to hit record levels from capacity expansion efforts, amid elevated ASP for rubber accelerators owing to rising crude oil prices. While we have raised earnings
expectations for 2022-23, our valuation peg has been reduced due to the rising interest rate environment. Maintain BUY with a target price of S$0.695.
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Nanofilm Technologies International (NANO SP)
2021: Results In Line; Expect Higher Expenditures To Fund Growth
Nanofilm's 2021 earnings of S$62m (+8% yoy) was in line, meeting 96% of our estimate. 2H21 saw a rebound with earnings growth of 145% hoh and 12% yoy.
Nanofilm is optimistic of its sustainable growth outlook in 2022 with its BU-driven strategy in accelerating the adoption of its nanotechnology solutions. However, we remain cautious as we expect Nanofilm to incur higher costs to enhance its future
growth. Maintain HOLD with a 2% higher target price of S$2.72 (23x 2022F PE).
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