Excerpts from UOB Kay Hian report

Staying the course; sticking with the fundamentals. Our recent addition, Sunningdale, declined 9.2% m-o-m but it looks oversold. In view of this, a firm US dollar and expected recovery in 2Q18, we reiterate our BUY call on Sunningdale.

CSE saw profit-taking in June (-6.5% m-o-m) but is still offering positive returns of 4.9% since being added to our alpha picks.

CSE remains our preferred proxy to the firm oil prices as we remove Keppel Corp due to the lack of near-term catalysts for the latter.



khooboohor kohboonhwee4.16CEO Khoo Boo Hor with non-executive chairman Koh Boon Hwee. NextInsight file photoSunningdale – BUY (Yeo Hai Wei)

Oversold. The stock has retraced 33% from its recent high and is currently trading at 0.7x P/B and at 7.7x 2018F PE, which is significantly cheaper than its peers, including Memtech.

Hoping for a better 2Q18 to provide relief. Investors have been shaken by a weak 1Q18, exacerbated by forex losses.

We expect a seasonally better 2Q18 and the potential for a forex gain in 2Q18 as the US dollar has gained 1.9% vs the Singapore dollar.

Sunningdale

Share price: 
$1.29

Target: 
$2.00

Price currently below major shareholder’s last purchase. After the price retracement, Sunningdale is trading at an 18% discount to the last acquisition price of S$1.71 (13m shares) by its chairman Koh Boon Hwee.

Share Price Catalyst
• Event: Recovery in 2QFY18 earnings and gains from disposal of its non-core asset.

• Timeline: 3-6 months

CSE Global – BUY (Yeo Hai Wei)

CSE

Share price: 
42.5c

Target: 
61c

Solid proxy on recovering oil prices. CSE is a good proxy on recovering oil prices as two-thirds of its existing orderbook of S$175m comes from the O&G sector. In addition, the stock offers sustainable dividend yield of more than 6%.

High entry barriers. The group has a 32-year track record in a business with high entry barriers. CSE is one of the few qualified system integrators in the region for O&G and communication infrastructure industries.

Potential synergies from new shareholder. Serba Dinamik, a Malaysian-listed company, recently bought a 25% stake in CSE at S$0.45/share. We see potential synergies as it could open up new markets for CSE such as Malaysia and Middle East.

Share Price Catalyst
Event: New contract wins and continued recovery in earnings.


Full report here. 


Share Prices

Counter NameLastChange
AEM Holdings1.040-0.030
Alliance Mineral0.168-0.002
Anchor Resources0.018-
AusGroup0.0310.002
Avi-Tech Electronics0.280-0.010
Best World Int.1.780-0.110
China Sunsine1.200-0.030
CSE Global0.515-0.005
Food Empire0.5600.005
Geo Energy0.178-0.002
Golden Energy0.220-
GSS Energy0.1030.002
HMI0.545-
ISDN Holdings0.225-0.005
KSH Holdings0.520-0.010
Miyoshi0.054-0.002
Moya Asia0.087-0.001
Nordic Group0.325-
Oxley Holdings0.295-
REX International0.0810.002
Riverstone1.080-
Roxy-Pacific0.405-0.005
Sing Holdings0.405-
SingMedical0.4650.005
Sino Grandness0.053-0.002
Straco Corp.0.8000.020
Sunningdale Tech1.330-0.010
Sunpower Group0.525-
The Trendlines0.0870.001
Tiong Seng0.2500.005
Uni-Asia Group1.170-0.010
XMH Holdings0.163-0.022
Yangzijiang Shipbldg1.5900.010

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