buysellhold july.23



CSE Global (CSE SP) Multi-year growth ahead

Strong FY23: Maintain BUY with SGD0.71 TP

CSE Global beat consensus and our expectations (SGD21m NPAT) with FY23 revenue rising 30% YoY to SGD725m and NPAT surging 372% YoY to SGD22.5m. Cash generated from operations improved significantly to SGD72m from SGD9m in FY22 and net gearing is now at 0.35x.

Order book is 52.2% higher YoY at SGD730.6m. Going forward, we expect margins to continue to improve as CSE executes its order book and enjoys more operating leverage. In addition, we expect CSE to secure more communications and electrification orders. We expect about SGD1.1b of orders in FY24.

In addition, we expect potential accretive acquisitions in Australia and the US for expansion in both key segments. As a result, we raise our FY24/25E PATMI by 10% and 23.4%, and revise up our TP to SGD0.71 from SGD0.65, based on 15x FY24E P/E. CSE is one of our conviction SMID picks, maintain BUY.


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Food Empire Holdings (FEH SP)
2023: Exceeds Expectations With Record-High Dividend and Core Earnings

FEH reported 2023 core earnings of US$56.5m (+25.3% yoy), outperforming our estimate by 5%. Record-high revenue was achieved, on increased sales volumes and ASPs in FEH’s core markets. Record dividend of 10 S cents/share has also been proposed to reward shareholders, translating to an attractive 7% yield.

As consumer demand remains resilient across its core markets, we raise 2023 and 2024 core earnings by 3-5%. Maintain BUY with a 4% higher target price of S$1.69.


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Delfi Ltd
Revenue growth stave off margin pressures

■ FY23 PATMI grew 5.4% yoy to US$46.3m, in line at 101.1%/99.4% of our/Bloomberg consensus’ FY23F estimates.

■ In its analyst briefing call on 28 Feb 24, management attributed GP margin compression of 2.0% pts yoy in FY23 to higher promotional expenses.

■ Reiterate our Add call on attractive valuation of 9x forward 12M PE; TP lowered to S$1.47 pegged at 13.8x FY25F P/E from 15.0x previously.


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Frencken Group (FRKN SP) 2023: Results Above Expectations; Semiconductor Segment Outperforms

Frencken’s 2023 earnings of S$33m (-37% yoy) are 27% above our expectation. Semiconductor and analytical & life science were the best performers in 2H23, recording 30% and 11% hoh growth respectively, mainly driven by strong demand of key customers from Europe.

Frencken expects stable revenue in 1H24 vs 2H23 and will continue to focus on its programmes for customers to ensure it is well-positioned for a recovery. Maintain BUY with a 5% higher target price of S$1.74



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Raffles Medical Group Ltd - Lacklustre near-term

• 2023 earnings were below expectations at 89% of our estimates. 2H23 adjusted PATMI dropped 77% YoY, excluding fair value gains of S$7.4mn.

The absence of high-margin pandemic-related services such as vaccination and testing was the major drag on earnings. Other activities pulling down margins were lower revenue per bed from transitional care facilities (TCF) and high loss ratios in their insurance business as patient claims normalised.

We cut our FY24e PATMI by 30% to S$59.2mn. Our NEUTRAL recommendation is maintained, and the DCF target price is lowered to S$0.96 (prev. S$1.02). We do not expect any recovery in margins in the near term. Price pressure from TCF will linger due to aggressive competition. Weakness in foreign patient volume due to the strong Singapore currency, cheaper alternatives, and improved healthcare services in the region. Containing the decline in earnings will be progressive price increases in Singapore hospitals and narrowing losses in China.



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