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Oiltek International Ltd - Executing ahead of expectations Recommendation: BUY (Maintained); TP S$1.19, Last close: S$0.92;
• 3Q24 PATMI spiked 83% YoY to RM8.9mn. 9M24 PATMI beat expectations at 83% of our FY24e forecast, whilst 9M24 revenue was below forecast at 67%. A combination of geographical mix and project timing has boosted 9M24 margins by 5% points.
• The company continues to build upon its order books to a record level of RM491mn. We believe order momentum is rising in emerging countries from underinvestment in capacity since the pandemic. The rebound in palm oil prices is stimulating new planting and demand for refining capacity outside the core markets of Indonesia and Malaysia.
• We raised our FY24e earnings by 11% to RM25.8mn from higher gross margins and revised our SGD-MYR assumptions from RM3.45 to RM3.33. Our FY24e revenue is lowered by 10% to RM224.4mn. We also removed our valuation discount to engineering peers from 15x to 22x PE due to the momentum in the order book and earnings.
Our target price is raised to S$1.19 (prev. S$0.70), and the BUY recommendation is maintained. The company has a net cash of RM104mn to fund the growth in operations. We believe demand remains robust, supported by increased capacity in palm oil refining, fractionation, and phytonutrients globally
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Frencken Group Ltd
9M24 net profit a miss
■ 9M24 revenue of S$571.3m (+6.7% yoy) was in line at 74% of our full-year forecast but below Bloomberg consensus forecast at 72%.
■ 9M24 net profit of S$27.3m (+42.5% yoy) formed 63% of both our and Bloomberg consensus full-year forecasts, below expectations.
■ Reiterate Add call on Frencken as we expect the semicon industry to recover gradually over 2025-26F.
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Sime Darby Property (SDPR MK)
Exceeding expectations once more
Profit and sales above expectations; U/G to BUY
SDPR's 3Q24 core net profit of MYR133m (-11% YoY, -16% QoQ) was 5% above our and consensus estimates for the quarter. 9M24 locked-in property sales of MYR3.2b were also above our and management expectations. We raise FY24-26E earnings forecasts by +8% to +31% and TP to MYR1.66 on a higher 1.2x FY25E P/B peg (peak valuation since de-merger). The higher P/B peg (previously 1.0x) is due to improved fundamentals. Catalysts include more data center deals in its Elmina Business Park project. U/G to BUY.
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SD Guthrie (SDG MK)
3Q24 headline profits lifted by disposal gains
Core results within our/consensus estimates
Had it not been for higher-than-expected tax expenses, SDG’s 3Q24 core earnings would have been better. Looking forward, SDG is likely to post its strongest earnings in Q4 due to higher ASPs, better output, and improving downstream margins. We are keeping our EPS forecasts pending its results briefing. SDG remains a BUY with TP of MYR5.20 on 0.55x RNAV.
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Frencken Group Ltd (FRKN SP)
Slower recovery but still the cream of the crop
Maintain BUY with a lower TP of SGD1.50
Frencken reported 3Q24 revenue of SGD198.6m and PATMI of SGD9.2m, up 7.7% QoQ and 29.3% YoY, below consensus and our estimates. This was mainly due to a decline in the medical and automotive segments as well as lower-than-expected growth in the life sciences and semi-con segments. As a result, we cut our FY24/25E PATMI by 12%/7% respectively, and lower our TP to SGD1.50, pegged to 14x FY25E P/E. Frencken remains our Top Pick in the Singapore tech sector.
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