Business

Brokers' take

Compiled by Kenneth Lim, The Business Times

WILMAR INTERNATIONAL | HOLD

TARGET PRICE: $3.50
MARCH 29 CLOSE: $3.58

UOB Kay Hian Research, March 29

Upgrade to "hold" after recent share price weakness. Wilmar International's share price has fallen 11.6 per cent from a high of $3.98 on Jan 2, 2017 to $3.52 on Tuesday.

The drop is possibly due to weakening commodity prices.

Sugar prices dropped the most (about 14.1 per cent), followed by crude palm oil spot prices and soybean prices, which dropped 11.6 and 6.1 per cent respectively from Jan 2, 2017 to Tuesday.

Sugar prices were weighed down by ample supply but weaker demand. The weakening CPO prices were mainly due to the market expecting a strong production recovery, but demand growth is lagging.

The dip in soybean prices was largely due to better-than-expected production in South America, and the expected higher soybean planting in the US as well. Wilmar's core businesses are still operating as usual and we expect all three key divisions to grow steadily in 2017, supported by higher sales volumes.

AVI-TECH ELECTRONICS | BUY

TARGET PRICE: $0.52
MARCH 29 CLOSE: $0.42

RHB Research, March 29

Avi-Tech, a total solutions provider for burn-in board manufacturing and printed circuit board assembly, has successfully recovered from its merger and acquisition mishap, and is now in a position to ride on the world's march towards smart cities and digitalisation.

Avi-Tech is on track to record stable year-on-year net profit after tax growth of 10-15 per cent in FY17 and FY18 forecasts, with a strong balance sheet (net cash of over $31 million or 50 per cent of its market cap). The stock is trading at undemanding valuations - FY18 forecast ex-cash price-earnings ratio of only 4.4 times. We initiate coverage on Avi-Tech with "buy", and a discounted cash flow-derived target price of $0.52 (30 per cent upside).

EZION HOLDINGS | ADD

TARGET PRICE: $0.45
MARCH 29 CLOSE: $0.34

CIMB Research, March 28

Ezion finally announced it had entered into agreements to buy the remaining 50 per cent stake in its joint venture with Swissco Holdings. Estimated cash outlay is $5 million. A 100 per cent stake implies at least about US$86 million (S$120m) worth of consolidated loans, and higher future interest costs.

We think it may find a strategic investor to manage the impact. Maintain "add" and target price, based on 0.5 times FY17 forecast price-to-book value (50 per cent discount to five-year mean).

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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