Frencken has just broke out of the immediate 0.35 resistance level on the back of new analyst coverage. Possible to see it trade higher if it manages to stay above 0.35 support now. A reasonable target to 0.400 is expected first. Has tested the 0.35 level for 4 times since a month ago only to break up today finally, could this be a new upward phase ? Lets watch !
Stop loss at 0.335
Lim and Tan – 21st March 2014
We are recommending a BUY on Frencken
Group (30 cents, down 1/2 cent) as (a) this 60
year old electronic contract manufacturer which
turned around from a loss of $12mln in 2012 to
$17mln profit in 2013 is expected to continue to
benefit from the recovery in demand from their
key automotive, medical, semiconductor and
analytical customers in Europe (62% of sales)
such as BMW, Continental, Bosch, GE
Healthcare, Siemens Healthcare, Philips
Medical, Intel, ASML and Thermofisher;
(b) its 2014 growth of 20% compares favourably
to its forward PE of 6x; (c) its forward PE of 6x is
undemanding compared to sector peers such as
Sunning Tech’s 9x and Amtek’s 10x despite
similar return and growth profiles; (d) its price to
book of 0.5x and dividend yield of 5% provides
down-side support and(e) it will benefit from the
stronger US dollar and Euro given their sales are
denominated in those currencies.
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