Brokers’ take, Latest Business News - The New Paper

Brokers’ take

This article is more than 12 months old

Compiled by Wong Kai Yi



NOV 15 CLOSE: $0.174

RHB Research Institute, Nov 15

We maintain "buy" with a new 23-cent target price from 22 cents, a 35 per cent upside plus 9.4 per cent FY2018 yield - this is as we lift FY2018-2019 earnings by 7 per cent.

Fu Yu reported an exceptional Q3 2018, with continued topline growth of 4.4 per cent and Patmi surging 543 per cent year-on-year.

We expect continued revenue and margins expansion from new projects in the automotive, consumer and medical spaces.

With more than 80 per cent of its revenue in US dollars, the company should benefit from the strong US currency.

As a result, Fu Yu remains our small-mid-cap manufacturing sector top pick. We are also one of only two brokers covering this stock.

With the ramp up in automotive projects to continue in subsequent quarters - coupled with new projects in the medical and consumer fronts - we expect Fu Yu's positive growth momentum to continue.

With a sound balance sheet (net cash of $77.3 million), positive operating cash flows of $15 million to $20 million a year and an improving business, we expect the company to continue rewarding shareholders with higher and more attractive dividends. We expect dividends to increase to $0.016.



NOV 15 CLOSE: $2.58

DBS Group Research, Nov 15

Hong Leong Finance's (HLF) loan growth dipped 2.4 per cent quarter-on-quarter (+5.8 per cent year-on-year).

Since December last year, loan book still grew by 4.7 per cent.

For now, HLF is adopting a cautious stance to write loans selectively and focus more on risks given headwinds in the macroeconomic outlook.

According to HLF, branches have been actively writing Housing Board loans at competitive rates and terms.

HLF also continues to maintain adequate provisions and recorded a $7 million writeback this quarter.

As HLF mostly lends on a secured basis, we remain confident of HLF's asset quality, demonstrated by its low provision and NPL (non-performing loans) levels historically.

HLF announced that it has embarked on internally-driven projects, as well as projects with fintechs, as it starts its digital transformation journey and embraces the disruptive economy through innovation.

In the last quarter, Singdollar fixed deposits rates have continued to inch up.

HLF has locked in its funding requirements for at least a year in advance as its deposit base is mainly made up of fixed deposits of up to one year.

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