RHB Bank Singapore analyst Alfie Yeo has upgraded Frencken Group E28 to “buy” as he sees signs of the group’s revenue and earnings bottoming out. This is led by the better-than-expected 3QFY2023 ended Sept 30 revenue traction from better customer orders and a more positive outlook on the semiconductor industry, Yeo writes in his Nov 27 report.
Frencken’s 3QFY2023 revenue of $184 million stood ahead of Yeo’s estimates thanks to broad-based growth.
“Despite the continued y-o-y decline in revenue and earnings, we are upbeat on the q-o-q turnover growth and the net profit improvement from Frencken’s key segments,” he adds.
In addition to his “buy” call, Yeo has lifted his target price to $1.45 from 97 cents previously.
“We now turn positive on the stock ahead of an anticipated recovery next year,” he says. His higher target price is premised on better earnings for the FY2024 and a higher target P/E of 14x from 10x previously.
In line with his expectations of a better outlook, Yeo has also raised his revenue estimates for the FY2023 to FY2025 by 2% to 7%. In addition, his earnings estimates have increased by 7% to 12% for the FY2024 to FY2025 to reflect expectations of better revenue and margins ahead.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents
As at 1.21pm, shares in Frencken are trading 1 cent lower or 0.89% down at $1.12.
