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Investors’ Corner (ComfortDelGro Corp, Fu Yu Corp, Valuetronics Hldgs, Yoma Strategic Hldgs)
Investors' Corner | 04 June 2015
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By: Joey Ho
Articles (30) Profile

ComfortDelGro Corporation
Price – $2.97
Target – $3.30

We expect the Downtown Line (DTL) stage 2 to commence operations in 1Q16. The opening of DTL stage 2 is expected to feed more traffic into DTL stage 1 which saw ridership gaining traction. The outcome of the Bulim bus tender is positive for the sector, in our view. This is because the tender was not awarded to the lowest among the bids. This bodes well for future tenders as price competition is likely to be rational and the focus will also be on service quality and operational efficiency, which would benefit ComfortDelGro, in our view, given the group’s strong operating track record in the UK and Australia. Based on our assumptions, the bus contracting model could lead to a special dividend payout of $0.216 to $0.25 a share. We have not assumed the special dividends in our model. We forecast a 3-year earnings CAGR of 11%. More importantly, the group has been generating strong operating cash flow of more than $600m annually.
Upgrade to BUY. UOB-Kay Hian (28 May)

Fu Yu Corporation
Price – $0.16
Target – $0.30

We believe that FY15 could be a record year for Fu Yu, with net profit levels not seen since FY04. The pick-up in business in Singapore and China-could contribute positively to earnings. We also understand that Fu Yu is now in a better position to take up customers or projects with better margins when compared to the past. A strategic decision to restructure the company and implement various means of cost cutting has been the key focus of Fu Yu over the past few years. The results of such labour have gradually appeared and this was more significantly shown in its recent 1Q15 performance where gross margins improved substantially. For FY15, we expect management to continue to focus on streamlining more processes, improve efficiency, and undertake more cost cutting measures to improve its gross margins for the overall business. Hence, while we expect topline growth to be quite subtle, we do opine for a positive margins expansion for FY15. We expect the completion of the capital reduction exercise to allow for a maiden dividend since FY10, with a 30% payout. Initiated BUY. RHB Research (28 May)

Valuetronics Holdings
Price – $0.515
Target – $0.67

FY15 revenue formed 100% of our estimate for FY15F, while net profit formed 111% of our full year projection. Overall gross margin for 4Q15 continued to grow y-o-y and q-o-q to 14.8% from about 14% as sales mix continued to tilt toward the higher margin industrial and commercial electronics (ICE) segment; in-line with our investment thesis. The group continued to highlight the challenges faced in the consumer electronics segment but sounded confident in its ability to better manage its past dependence on LED lighting products. On the IC E front, management highlighted that they are well positioned for growth in the next 2 to 3 years. On the whole our net profit forecast for FY16 notches up by 4.6% to HK$156.7m from HK$149.8m previously. Maintain BUY. KGI Fraser (28 May)

Yoma Strategic Holdings
Price – $0.51
Target – $0.52

4Q15 topline remained mostly flat at $27.6m. Contributions from the sales of residences and land development rights dipped from $23.4m in 4Q14 to $12.5m in 4Q15, offset by increased contributions from rental income and also the automotive and tourism segments. Overall, the quarter was broadly within expectations. Yoma reports that 100 out of the 150 units at Star City A5 has been leased out to date, up from 66 units as at the end of the last quarter. Total revenue generated from the group’s investment properties increased y-o-y from $0.4m to $2.3m in 4Q15. At Star City, building A3 was completed over the quarter, with 100% of its profits now recognised, while the balance of $6.8m of progress recognition from building A4 is expected to roll in over the next 6 months. Maintain HOLD. OCBC Investment (25 May)

Equipped with a bachelor in banking and finance, Joey covers the finance, technology and healthcare industry in Singapore.

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ComfortDelGro Corp  2.480 +0.03 +1.22%   
Business: [FY18 Turnover] Public transport services (71.2%), taxi (19.1%), others (9.7%).

Insight: May-19, 1Q19 revenue rose 7.8% to $947.3m, underpi... Read More
Fu Yu Corp  0.200 -- --   
Business: Co is a plastic products manufacturer. [FY18 Geographical] China (56.8%), Singapore (23.9%), Malaysia (19.3%).

Insight: Feb-19, FY18 revenue rose 1.4% to to $197.7m attri... Read More
Valuetronics Hldgs  0.610 +0.015 +2.52%   
Business: Provides integrated electronics manufacturing services. [FY18 Turnover] Industrial & commercial electronics (51%), consumer electronics (49%).

Insight: Feb-19, 9M19 revenue slipped 2.7% to HK$2.1b mainl... Read More
Yoma Strategic Hldgs  0.335 +0.015 +4.69%   
Business: Co operates mainly in Myanmar under several business segments. [FY18 Turnover] Automobile (40.5%), real estate (20.8%), real estate services (18.4%), consumer (12.9%), financial services (6.2%), investments & others (1.2%).

Insight: Feb-19, 3Q19 revenue jumped 12.1% to $27m mainly a... Read More

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