Frencken    Last:2.92    -0.08

New phases new horizons, aim $3 by 2022

accumulate low if gaping down again at closing? DYODD

 

Why closing gap down at 2.14 at 619,000 shares?

 

Thank you crouching tiger...

 

If you' re buying for long term short-term fluctuations shouldn' t affect you. Fundamentals of the counter are good.

 

Hi experienced traders, Why does frencken share price seem to keep falling? Is it still worth to keep holding it? I just started my investing journey. Thanks :)

 

Semiconductor segment outperformance will continue

The lack of chips and parts across the supply chain will continue supporting the outperformance of the semiconductor segment, says RHB Group Research analyst Jarick Seet. 

In a note, Seet says the planned construction of about 29 new fabrication facilities in the next few years should ensure high demand for equipment.

" However, as the overall performance of the technology stocks under our coverage is only at an acceptable level, we remain ' neutral' on the sector but maintain selectively positive on the semiconductor supply chain beneficiaries," says Seet.

As the industry pushes to address the global chip shortage, the equipment spending for the 29 fabrication plants is likely to surpass US$140 billion over the next few years, according to the semiconductor trade association SEMI.

Of the 29, 19 have already started construction while the remaining 10 will likely break ground in 2022. 15 of the 29 fabrication plants starting construction in 2021 and 2022 are foundry facilities with capacities ranging from 30,000 to 220,000 wafers per month. 

The memory sector will begin construction on four fabrication plants over the two-year span, boasting higher capacities ranging from 100,000 to 400,000 wafers per month, says Seet. 

RHB' s top picks include Frencken Group, which continues to take in large orders from the medical industry on items related to imaging as well as other scanning-related equipment. 

" Its clients have also reduced their number of go-to parts manufacturers and are making bigger orders from their remaining suppliers. As such, the group is set to see a ramp-up in orders this year," says Seet. 

He notes that Frencken' s management also remains bullish on the semiconductor segment, as all industries that use its chips are expected to grow strongly in FY21. 

" With its new acquisition, it may possibly ramp up revenue contribution in the next few years from one of its customers, which is a large semiconductor player based in the US but has operations in Singapore."

Seet maintains " buy" on Frencken, with a target price of $2.55.

RHB is also bullish on manufacturers such as Fu Yu Corp and Venture Corp. Aside from diversifying into the business of supply chain management for commodities, Fu Yu is also expected to do more joint ventures or acquisitions, while still rewarding shareholders with attractive dividends. 

RHB remains upbeat on the prospects of Fu Yu, maintaining its " buy" call with a target price of 37 cents. 

Meanwhile, Seet expects Venture' s subsequent quarters to continue improving with better profitability and margins, coming from new platforms of next-generation devices and strong demand across the majority of its segments. 

RHB kept its " buy" call for Ventures with a target price of $23. 

 

Bad selloff today.

 

Frencken' s Avimac acquisition to ramp up semiconductor capacity, add exposure to aerospace

UOB Kay Hian analyst Clement Ho has maintained his " buy" call on Frencken Group and raised his target price from $2.52 to $2.62 after its $14 million acquisition of aerospace and semiconductor focused company Avimac. 

In a Sept 15 report, Ho says that he believes this " bite-sized acquisition would help ramp up capacity expansion, particularly in the semiconductor segment, as well as to help the group gain access to new technologies and competencies.

Avimac was founded in 2018 by industry veteran Joe Lau, who was the founder of JEP Precision Engineering. The company is a subsidiary of JEP Holdings, now under UMS Holdings.

Prior to the acquisition, Avimac was a supplier to Frencken in various manufacturing programmes, and Frencken' s management cited that Avimac could act as a springboard for the group to penetrate the commercial aerospace engineering industry. 

This was due to its established customer base (counting GE Aviation and Commercial Aircraft Corporation of China as clients), certified manufacturing facilities and forthcoming programmes.

Ho notes that as at June 30, Frencken' s cash balance of $159.4 million and total borrowings of $87.5 million is more than sufficient to support the acquisition.

At this point, no additional injection is expected for Avimac and management does not foresee a significant increase in the group' s operating expenses or working capital requirements.

Separately, he expects the global demand for semiconductor components to remain strong. The current chip shortage situation in the semiconductor industry is driving demand for both front- and back-end semiconductor equipment. 

As such this bodes well for the key semiconductor customers of Frencken, who are mainly in the business of manufacturing equipment to make semiconductor chips. 

Ho says, " current indications and outlook of these customers are seeing a secular uptrend and we are of the view that demand for semiconductor parts and equipment is likely to be sustained into 2022.

He is of the view that Frencken' s valuation is supported by its strong earnings growth profile, with the compounded annual growth rate (CAGR) of the company' s earnings per share (EPS) estimated at 24% from 2020-2023.

As of 4.25 pm, shares of Frencken were trading at $2.48, with a FY2021 price to book ratio of 2.6 and dividend yield of 1.8%. 

 

From UOB Kay Hian, for reference only:
Frencken made a relatively small acquisition for an aerospace and semiconductorfocused company, Avimac Pte Ltd, for S$14m. We believe the acquisition would help
ramp up capacity expansion, particularly in the semiconductor segment, as well as to
help the group gain access to new technologies and competencies. We are maintaining
our BUY rating with a slight increase in target price to S$2.62 (from S$2.52) due to
higher valuations of key clients.

 

Must have some colour decoration than look nice, if all red than sgx would be very boring.

hokpin      ( Date: 15-Sep-2021 11:34) Posted: What so strong with this counter today while mostly are red in SGX? This counter is always amazing!

 

All SG counters REd red, only this Frencken keep moving up up up

hokpin      ( Date: 15-Sep-2021 11:34) Posted: What so strong with this counter today while mostly are red in SGX? This counter is always amazing!

 

What so strong with this counter today while mostly are red in SGX? This counter is always amazing!

 

Always the safe haven for SG stock in whatever times now...

 

strongest tech in SGX.

 

From UOB Kay Hian, for reference only:
  Trading Buy Range: S$2.39-2.40
Last price: S$2.35
Target price: S$2.62
Protective stop: S$2.27
The price has been moving higher along with
the rising conversion line which is acting as
support at the moment. The Stochastic is still
rising, suggesting increased upward
momentum. These could increase chances of
the stock price continuing to move higher.
We see increasing odds of stock price testing
S$2.62. Stops could be placed at S$2.27.
Approximate timeframe on average: 1-2 weeks
(initiate this trade idea if the stock hits the entry
price range within three trading days)
Our institutional research has a fundamental
BUY and target price of S$2.52.

 

 

Will it hit this TP tomorrow?

 

 

Outlook for semiconductor industry still strong heading into 2022

CGS-CIMB Research analyst William Tng still remains optimistic on companies in the semiconductor industry, giving " add" calls to all the companies under its coverage.

In a sector report, Tng noted that the Semiconductor Industry Association (SIA) announced that global semiconductor industry sales were US$45.4 billion ($60.92 billion) in July 2021, up 29% y-o-y, and 2.1% higher q-o-q. 

According to SIA, global semiconductor sales strength in July was driven by " robust demand across all major regional markets and semiconductor product categories."  

This also was with chip production and shipments reaching all-time highs in recent months as the industry worked to address sustained high demand.

Furthermore, the World Semiconductor Trade Statistics (WSTS) also lifted its projections of global semiconductor sales forecast, and sales in 2022 are now expected to grow 25.1% y-o-y to US$550.9 billion, up from its previous forecast of $527.2 billion. 

WSTS pointed out that although growth will slow from the high base in 2022, 2023 sales are still expected to climb 10.1% y-o-y to US$606.5 billion, compared to the previous expectation of 8.8% growth to US$573.4 billion.

Tng highlighted AEM Holdings and UMS holdings in his report, giving them target prices of $4.78 and $1.97 respectively. For AEM, he noted the new share placement of the company to a  unit of Temasek Holdings, which is now the company' s largest shareholder with a stake of 8.68%. 

AEM has also recently announced a new undisclosed memory customer, and Tng says that he sees " earnings upside risks to our FY2022 forecasts from possible accretive acquisitions and further new customer wins."

Some potential re-rating catalysts, he said, are upward revisions to revenue guidance in the coming months and further new customer wins, while downside risks include delivery delays due to lockdowns/movement restriction extensions and aggressive competitive responses from its competitors.

For UMS, Tng noted that the company rewarded shareholders with an unchanged distribution per share of one cent and a special 1-for-4 bonus issue, its third bonus issue since June 2014.

" With the stronger earnings outlook over FY2021-2023, we see UMS reverting to its historical DPS of six cents, leading to projected 3.53% dividend yields over FY2021-2023," Tng writes. 

Potential re-rating catalysts for UMS include stronger-than-expected orders for its semiconductor business, new customer wins and faster-than-expected earnings recovery for subsidiary JEP Holdings.

However, he also warns that a key risk is operational disruptions arising from potential Covid-19 cases at its Malaysian factory.

While Tng did not cover much about Frencken Group in the report, he also gave it an " add" call and target price of $2.49. 

 

 

Frencken Group acquires Joe Lau' s Avimac for S$14m

Integrated technology solutions company Frencken Group announced on Tuesday that it is acquiring Singapore-incorporated Avimac for a cash consideration of S$14 million.

This is aimed at expanding the business and will be carried out via Frencken' s wholly-owned subsidiary ETLA Limited.

Avimac supplies high precision machining parts to a variety of industries with a specialisation in the aerospace and semiconductor sectors. It was started in 2018 by Joe Lau, a veteran in the precision engineering industry and the founder of JEP Precision Engineering.

Avimac was a supplier to ETLA prior to the acquisition, supporting the group' s needs in various manufacturing programmes.

In a statement, the group said that this move will enable it to accelerate the expansion of its capacity to support customers' new programmes, particularly from customers in the semiconductor industry, as well as gain access to new technologies and competencies, potentially building a new business pillar in the aerospace industry.

The net book value of Avimac was S$4.4 million as at July 31, 2021. No independent valuation was conducted on Avimac.

Dennis Au, group president of Frencken, said: " Avimac has advanced technologies and capabilities in high precision machining, especially for stainless steel parts given its significant exposure to the aerospace industry."

He said that it is a " good fit" to its mechatronics division' s integrated capabilities from design and development to manufacturing solutions.

" While the group already has experience serving the aerospace industry through our cooperation with NASA Jet Propulsion Laboratory, Avimac will act as a springboard for us to penetrate the commercial aerospace engineering industry given its established customer base, certified manufacturing facilities and forthcoming programmes," he added.

The acquisition will be financed using the group' s internal resources and is not expected to have a material impact on the net tangible assets per share or earnings per share of the group for the financial year ending Dec 31, 2021.

 

 

Frencken: Acquires Avimac For S$14 Million To Drive Expansion.

Acquisition will enable the Group to expand capacity for new programs and enhance competencies. Avimac will also open doors for Frencken to build a new business pillar in the aerospace sector...

crouchingtiger      ( Date: 07-Sep-2021 20:26) Posted: Acquisition announced today! Tomorrow will fly!!!