September 2

[SG] 7 Interesting Stock Ideas for September 2021

What a month August has been especially for technology stocks from China. Technology stocks in China were massacred due to new measures implemented by the Chinese government. NASDAQ index however continues to achieve all time highs.

In the local context, Singapore stocks have its fair share of gains and losses. Here are 7 stocks that you should take note of in the month of September.

#1 Rex International Holdings Ltd

CGS CIMB has maintained Outperform rating on the stock with a target price of $0.33.

There will be much better days ahead for the stock due to good acquisition. ” The acquisition of the 33.84% interest in the oil producing Brage Field in Norway will be effective from 1 January 2021, after approval from the Norwegian authorities.

Brage Field will add around 3.4k barrels of oil production per day net to Rex’s subsidiary, Lime
Petroleum. We estimate this will translate to around US$20mn free cash flow net to Rex in 2021.

The acquisition will be funded by the US$60mn senior secured bond that was fully subscribed back in June 2021. For the year ahead, based on US$65 oil price, we forecast Rex’s net cash position to
surge to US$107mn by FY2022F. This is equivalent to S$144mn or 58% of the group’s current market capitalisation.”

>> Read more about the company here.

#2 China Sunshine Chemical Holdings

UOB Kay Hian has maintained its ADD rating of the company with a target price of $0.68.

The positive results achieved by the company is a main driver for the sentiment. “China Sunsine (CSSC) reported 2Q21 net profit of Rmb140m (+12% qoq, +186% yoy), riding on continued tailwinds of robust downstream demand.

1H21 net profit came in at Rmb265m (+94% hoh, +222% yoy), above expectations at 73%/75% of our/Bloomberg consensus FY21F forecast.”

Moreover, ” valuation is attractive at 3x FY22F P/E (ex-cash). We raise our FY21-23F EPS forecasts by 0.2-8.7% to reflect higher GPM assumptions. Our TP rises to S$0.68, still based on 1.05x FY21F P/BV.”

>> Read more about the company here.

#3 Q&M Dental Group

Maybank Kim Eng has maintained its Buy rating on the company with a target price of $1.03.

Expansions of the company is on track, which is a good sign for good valuation.” Total revenue doubled to SGD50.8m, driven by higher turnover in its core dental division (+86% YoY) and estimated contribution of SGD10-11m from the testing business (1Q21: SGD2-3m; 1H20: NIL).

In Jun ‘21, the Group opened one clinic in Jurong Yuhua. It has also secured locations to open
six more dental clinics island-wide and is expected to commence operations by 4Q21. YTD, Q&M has added 10 clinics to its network and it’s targeting to open another 10 by 4Q21.”

>> Read more about the company here.

#4 Comfort Delgro

CGS CIMB has maintained its ADD rating on the stock with a target price of $1.80.

The listing of its Australian subsidy is the main driver of the positive sentiment. “To date, CD has invested a total of S$1.17bn in Australia. CD’s Australia bus business had a total of 2,606 buses across Sydney, Melbourne, Darwin and Queensland as at end-FY20; 84% of its fleet operates on contract routes. CD also had 202 nonemergency patient transport vehicles and 397 taxis in Australia as at end-FY20.

Despite the bushfires and Covid-19, Australia was the best performing overseas location for the CD group in 2020. In 1H21, CD’s Australian business generated S$37.9m operating profit (+392% yoy), almost back to 1H19’s levels (S$38.4m).

Management said key reasons for the strategic review were: 1) the assets have matured, reaching a scale that could allow value unlocking, and 2) Australian operations demonstrated strong resilience despite the pandemic. CD remains committed to grow its operations in Australia.”

>> Read more about the company here.

#5 Thai Beverage

UOB Kay Hian has maintained its BUY rating on the stock and with its target price at $0.92.

The company’s robust operations and resilient were the reasons for the analyst to provide a good valuation. “Thai Beverage (THBEV) provided a business update, but full financials were not released. 9MFY21 EBITDA (excluding associates’ contribution, including other income) of Bt36.6b (+12% yoy), made up approximately 83% of our full-year estimates.

This was in line with expectations given a seasonally weaker 4Q. 3QFY21 EBITDA was up (+20% yoy) from a low base. Recall that 3QFY20 saw the total alcohol ban in Thailand for approximately one month. On a qoq basis, EBITDA was up 3%”

Furthermore, ” revenue increased to Bt60.8b (+15% yoy) in 3QFY21, largely supported by the huge uptick in alcohol volumes from a low base. On a sequential basis, revenue was up slightly (+2% qoq).”

>> Read more about the company here.

#6 Koufu Group

UOB Kay Hian has maintained its BUY rating on the company with a target price of $0.77.

The main driver of the sentiment was the “above expectations” results and “sequential improvement trend intact.”

“Koufu reported 1H21 earnings of S$9.9m (+291% yoy/+35% hoh). The results were above expectations, forming 67% of our full-year forecast, mainly due to higher-than-expected other income, which include: a) government grants of S$4.4m; b) renovation income of S$1.6m; and c) gains from the disposal of assets of S$0.7m.

We continue to see sequential improvement of earnings hoh (S$9.9m in 1H21 vs S$7.4m in 2H20) and revenue hoh (S$106m in 1H21 vs S$103m in 2H20). We expect this trend to continue, led by the gradual reopening of economies.”

>> Read more about the company here.

#7 Wilmar International

UOB Kay Hian has maintained its BUY rating on the company with a target price of $6.40.

The extremely positive sentiment is because of the “feed & industrial product segment is expected to continue to perform with positive downstream margin and high selling prices.

This is also further supported by the sustained strong demand from the tropical oils businesses”

“Plantation and sugar milling segment is expected to continue leveraging on the high palm oil and sugar prices.

On top of that, 2H production for palm would come in higher hoh and the sugar milling season also started since late-Jun 21.

The sugar milling operation is still expected to perform better yoy as the much higher sugar prices should be able to offset the impact from lower sugar production due to the adverse weather.”

>> Read more about the company here.

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Tags

China Sunshine Chemical Holdings, Comfort Delgro, Koufu Group, q&m dental, rex international, SGX, Thai Beverage, Wilmar international


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