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 Holdings1.030-0.020
Alliance Mineral0.123-0.007
Anchor Resources0.0150.001
AusGroup0.027-0.001
Avi-Tech Electronics0.280-
Best World Int.1.360-
China Sunsine1.130-
CSE Global0.4850.005
Food Empire0.500-
Geo Energy0.161-0.001
Golden Energy0.210-
GSS Energy0.082-0.001
HMI0.7200.005
ISDN Holdings0.235-
KSH Holdings0.425-
Miyoshi0.042-
Moya Asia0.0760.001
Nordic Group0.300-
Oxley Holdings0.3300.005
REX International0.069-
Riverstone0.915-0.015
Roxy-Pacific0.400-
Sing Holdings0.405-
SingMedical0.380-
Sino Grandness0.0470.002
Straco Corp.0.775-0.005
Sunningdale Tech1.380-0.020
Sunpower Group0.4900.005
The Trendlines0.080-
Tiong Seng0.2450.010
Uni-Asia Group0.750-
XMH Holdings0.153-
Yangzijiang Shipbldg1.5200.030

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