Excerpts from CGS-CIMB report.
|Yangzijiang Shipbuilding (ADD, TP: S$1.45)
● YZJ expects its order for 2019 to be close to US$2bn, although it has only done US$696m YTD. We believe there could be some new contracts in the pipeline.
We keep our US$1bn order forecast intact for FY19. Order book stands at US$3.18bn for 83 vessels.
● There is newsflow of M&As among the Singapore yards, so interest could return to YZJ as it is trading at a significant discount despite firmer earnings and stronger balance sheet.
● It is trading close to 5-year trough of 0.7x CY19F P/BV, a discount to Singapore yards (1.2x). Catalysts are stronger orders and the chairman returning to duty.
|AEM Holdings Ltd (ADD, TP: S$2.12)
● Positive earnings momentum into 1H20; our channel checks suggest that AEM has leased new factory space to cope with stronger demand.
● We expect more orders from Intel as it tries to catch up with competition.
● New product launch (hybrid Test Handler) could help drive FY20 earnings.
● Key risk is mainly 97% revenue dependence on Intel.
|CSE Global (ADD, TP: S$0.73)
● We are excited about CSE’s earnings growth potential, given its padded order backlog of at least S$300m by end-2020 (end 3Q20: S$232.6m).
● Though acquisitions within the year may have swung the balance sheet to a net debt position, we are still positive on them as they have broadened CSE’s regional reach or have been earnings accretive.
● The stock trades at FY20F P/E of 10.4x, below its 5-year average. Re-rating catalysts/downside risks include higher- /lower than-expected order wins and GP margins.
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