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Valuetronics Holdings Ltd

3QFY3/18: firing on all cylinders


■ 3QFY18 core net profit (+30% yoy) at 29% of our/consensus full-year forecasts (9M18: 82%), deemed a beat despite slight seasonality weakness in 4QFY18F.

■ Auto connectivity modules and printers led double-digit ICE sales growth yoy and qoq.

■ CE sales to benefit from new series and wider market penetration of smart lighting.

■ We do not expect supply chain issues, high utilisation level and Danshui lease expiry to significantly inhibit VALUE’s long-term growth.

■ We raise our FY18-20F EPS by 5.2-8.2% on higher sales assumptions, but our TP remains intact at S$1.10 after factoring higher S$/HK$ FX rate. Maintain Add.


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Fraser and Neave

Strong start into FY18 despite absence of CNY boost 



 1Q18 Revenue/PATMI formed 26%/17% of our full-year expectations

 Beverages remain a drag; partially mitigated by contributions from its Vietnamese associate, Vinamilk

 Continues to accumulate its interest in Vinamilk; Interest increased to 19.50% from 18.74% in end-FY17

 Maintained ACCUMULATE and SOTP-derived TP of S$2.83


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Wing Tai Holdings Ltd: Valuations not reflective of the cycle


Wing Tai’s 2QFY18 revenue rose by 113% YoY to S$130.0m, aided by the contribution from additional units sold in Le Nouvel Ardmore in Singapore, Le Nouvel KLCC in Kuala Lumpur, as well as contribution from BM Mahkota in Penang. PATMI for 2QFY18 came in at S$12.6m (as compared to S$2.1m in the corresponding quarter last year), representing 23.0% of our full-year forecast. We deem this set of results to be broadly within expectations. In our view, Wing Tai should be suitably positioned to ride on the property upturn, given that the group’s balance sheet remains robust, as it continues to be in a net cash position. Wing Tai currently trades at a consensus blended forward P/B of 0.50x, which is 0.4 S.D. below the 10-year mean. We believe that the recent market correction has resulted in attractive valuations for Wing Tai, given the current stage of the property cycle. With a change in covering analyst, we adjust our assumptions, as we bring our fair value down from S$2.77 to S$2.64. Maintain BUY.



Positioning In Volatile Times

As volatility could remain elevated, we highlight stocks we favour and how we would position to potentially benefit from the volatility.


• Spike in VIX.

After a long period of relatively low volatility, VIX has surged to 25.99 (vs mean of 14.42). This report highlights the stocks we would look to buy opportunistically when the market pulls back and how we would position in the current volatile times.


• FSSTI has retraced 6.3% from ytd peak and we see selective opportunities. Since 3 Jan 18, VIX has surged to 25.99, compared to its mean of 14.42 (since 2013). This is even higher than its +1SD (of 18.2) and this elevated level of VIX was last seen in Aug 15. During the 2015 episode (Greece uncertainties and Renminbi devaluation), VIX surged from 11.95 to 40.74 (from Jul to Aug 15), with a 15% retracement in the FSSTI during that period. Comparatively, the current volatility is not as severe as compared to 2015, and the equity market pull-back, at 6.3% from its ytd peak, is less severe. In our view, the current volatility could offer selective opportunities.


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