SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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 <div class='content-caption'>Fu Yu - MD</div>
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For banking and finance veteran David Seow, the African proverb “If you want to run fast, run alone. If you want to run far, run together” carries a particular resonance - it encapsulates his core management values of teamwork, communication, innovation and action. 
“Each person’s contribution matters, but only if we work together,” said the Group Managing Director of SGX-listed precision plastic components manufacturer Fu Yu Corporation Ltd. 
“Teamwork is key for an organisation to flourish. We need people who are able to complement each other’s diverse skillsets, and people who do their part properly to derive the right outcomes for everyone in the organisation.” 
In turn, good communication forms the bedrock of strong teamwork. “We should be unafraid to give constructive feedback, to seek advice to learn and improve, and work together to achieve common goals,” he added. 
This is where innovation plays a critical role. “In this fast-evolving world, you either adapt to stay ahead of the curve, or risk being left behind. Innovation does not have to be in technology - it can also be in changing the ways we do business and transforming mindsets.” 
Last but not least, it’s all about action, Seow pointed out. “Anyone who has worked with me will know that I get things done, and I do things the right way. I also prefer working with people who deliver results rather than excuses. It’s about taking action yourself, and not resting on your laurels, or waiting for someone else to do it for you.” 
A Bachelor of Science in Economics graduate from Singapore Management University, Seow spent nearly a decade of his career as a Senior Banker and Vice President of Structured Trade &amp; Commodity Finance in Societe Generale, Singapore.  He was appointed Fu Yu’s Group Managing Director in August 2021. 
“I learnt that regardless of my education and earlier work experience, I should avoid pigeonholing myself in a single industry to achieve success,” Seow recalled. 
“I went to a business school where most of the students aspired to be “investment bankers”. While I happily took that route for 10 years, I wanted to do more than what my colleagues and clients expected of me, and never shied away from working with others on projects outside my regular job. In hindsight, these experiences made me realise I had a penchant for business management, troubleshooting issues and creating solutions.” 
Although Seow may be seen as a “textbook finance expert”, he attributes much of his finance basics and business acumen to his experiences with start-ups, including co-founding and managing a restaurant in 2013, which has achieved and retained a Michelin star since 2017. 
“Nothing beats the “real-life” exposure of preparing and executing business plans, setting up accounts, managing capital expenditure and working cash cycles, retaining and motivating employees, as well as fire-fighting to ensure business continuity,” he added. In Growth Gear 
These cumulative experiences have equipped Seow well for his current role. “Fu Yu is a stable and classic manufacturing company that has been in operation for more than four decades,” he noted. 
“As Managing Director, I bring my go-getter, entrepreneurial, and proactive mindset to transform Fu Yu from a company that has been sailing steadily to one that is forward-thinking, innovative and in growth mode.” 
Starting out in 1978 as a small tooling design, fabrication and fitting shop, Fu Yu Corporation has since grown into a market leader, providing vertically integrated services for the manufacture of precision plastic components and the fabrication of precision moulds and dies. The Group was listed on SGX Mainboard in June 1995. 
Today, the Group has an established presence in the region with manufacturing facilities located in Singapore, Malaysia and China. It has built a broad and diversified customer base of blue-chip companies in the printing and imaging, networking and communications, consumer, medical, automotive as well as power tool sectors. 
Its comprehensive capabilities range from precision tool design and fabrication and precision injection moulding to secondary processes, such as silk screen printing, ultrasonic welding, heat staking and spray painting, as well as sub-assembly.  
Looking ahead, Fu Yu targets to boost growth in two ways - strengthening the Group’s capabilities and beefing up its talent pool. 
“We’ve launched several initiatives to expand our capabilities, such as technology and machine upgrades, a new innovation arm to work on modern products and designs, as well as improving efficiencies,” Seow said. 
“These “hardware” upgrades will work hand in hand with our corresponding “software” upgrades, as we upskill our employees and hire fresh talent to drive innovation within the Group.” 
With these initiatives, Seow expects a long growth runway for Fu Yu, where the organisation will not only be a manufacturer, but also a front-runner in advanced manufacturing and technology.  
“While we’ve always been known as a reliable pair of hands in manufacturing, these upgraded capabilities will enable us to work with our customers even more closely in areas of complex manufacturing and material science.” 
In parallel with its strategy to build a diversified product portfolio for business resilience and stability, Fu Yu intends to optimise its business mix to keep pace with current market trends, Seow noted. 
This will see the Group channelling greater resources towards boosting its business in market segments that display longer term stability and growth potential, such as medical, automotive, as well as eco-friendly and smart home consumer products. 
The Group’s manufacturing operations will also shift into higher gear as the redevelopment of its new factory in Singapore enters the final stages of completion. The plant is scheduled to begin operations in the third quarter of 2022, barring unforeseen circumstances. 
“With its adoption of Industry 4.0, this new “smart factory” will serve as a showcase of the Group’s advanced manufacturing capabilities,” he pointed out.  
“In addition to higher precision manufacturing capabilities and increased automation, our new factory will also feature seamless workflow across its tooling, moulding and assembly operations to achieve higher operational efficiencies and a reduced carbon footprint.” 
The Group is also in the process of broadening value-added services to customers. Its new division - Corporate Development - will work with research institutes in Singapore and other partners in the region to explore research and development (R&amp;D) programs, as well as identify commercially viable technologies to augment its manufacturing services. A Proactive Approach 
In this respect, COVID-19 has been a game-changer of sorts, Seow admitted. “COVID-19 was a timely reminder that we can never predict or pre-empt external conditions. However, we can control our own actions by proactively and continuously upgrading,” he added. 
“I want Fu Yu to be proactive and stay ahead of the curve, rather than be reactive, as that will then be too late. This is a mindset change which I am incorporating throughout the Group.” 
The pandemic also emphasised the need to have a greater control of one’s supply chain, or at least, have the ability to mitigate disruptions.  
“We’re taking things into our own hands to better manage our supply chain by centralising our procurement, which was previously done on a per site basis. To do this, we have already acquired and integrated a procurement company into the Group,” Seow noted. 
“We believe this is a differentiating factor from our competitors as it allows us to better manage our raw material prices and shorten lead times for delivery, which ultimately will benefit our customers and potentially attract new ones.” 
As for the Group’s Environmental, Social and Governance (ESG) goals, Seow is focused on optimising the Group’s energy consumption, which will help shrink its carbon footprint.  
“Some of the initiatives we’re working on include exploring the installation of solar panels in our factories, and integrating IoT technologies to improve real-time monitoring of utilities usage and machinery performance,” he said. 
“The challenge is to collect accurate data points that can be translated into useful information for our engineers to work on. With this, we can better measure and improve energy consumption by building an energy data model as a baseline which can be used to detect irregular utilities usage.” 
Apart from work, this 37-year-old father of a four-month-old son is passionate about golf. 
“I like how each game is different, even if you play at the same course. It doesn’t matter where your ball lands, because what matters most is the next shot, and how you proceed from the position you’re at, to the next position you want to get to. This applies in life as well.” 
Seow is also inspired by “a better me tomorrow”. “I try to be present in everything I do, which means being deliberate about learning from everything I experience, and making sure I am maturing and wiser every day.” 
And his advice to staff? “Be a do-er, don’t procrastinate and don’t make excuses,” he said. “Work hard, work smart, and always do the right thing.” Fu Yu Corporation Ltd 
Fu Yu provides vertically integrated services for the manufacture of precision plastic components and the fabrication of precision moulds and dies. Since its inception in 1978, the Group has grown to become one of the largest manufacturers of high precision plastic parts and moulds in Asia. Today, the Group has established a strong presence in the region with manufacturing facilities located in Singapore, Malaysia and China. Leveraging on over 40 years of operating history, the Group has built a broad and diversified customer base of blue-chip companies in the printing and imaging, networking and communications, consumer, medical, automotive and power tool sectors. 
The company website is: <a href="https://www.fuyucorp.com/">www.fuyucorp.com</a> 
Click <a href="https://www.sgx.com/securities/equities/F13">here</a> for the company's StockFacts page. 
For the year ended 31 December 2021 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/NQ9V9NZN2W9OT5F1/703919_Fu%20Yu%20-%20FY2021%20News%20Release.pdf">here</a>. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="https://www.sgx.com/research-education/market-dialogues">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="https://c/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    Fu Yu - MD


For banking and finance veteran David Seow, the African proverb “If you want to run fast, run alone. If you want to run far, run together” carries a particular resonance - it encapsulates his core management values of teamwork, communication, innovation and action.  
“Each person’s contribution matters, but only if we work together,” said the Group Managing Director of SGX-listed precision plastic components manufacturer Fu Yu Corporation Ltd.  
“Teamwork is key for an organisation to flourish. We need people who are able to complement each other’s diverse skillsets, and people who do their part properly to derive the right outcomes for everyone in the organisation.”  
In turn, good communication forms the bedrock of strong teamwork. “We should be unafraid to give constructive feedback, to seek advice to learn and improve, and work together to achieve common goals,” he added.  
This is where innovation plays a critical role. “In this fast-evolving world, you either adapt to stay ahead of the curve, or risk being left behind. Innovation does not have to be in technology - it can also be in changing the ways we do business and transforming mindsets.”  
Last but not least, it’s all about action, Seow pointed out. “Anyone who has worked with me will know that I get things done, and I do things the right way. I also prefer working with people who deliver results rather than excuses. It’s about taking action yourself, and not resting on your laurels, or waiting for someone else to do it for you.”  
A Bachelor of Science in Economics graduate from Singapore Management University, Seow spent nearly a decade of his career as a Senior Banker and Vice President of Structured Trade &amp; Commodity Finance in Societe Generale, Singapore.  He was appointed Fu Yu’s Group Managing Director in August 2021.  
“I learnt that regardless of my education and earlier work experience, I should avoid pigeonholing myself in a single industry to achieve success,” Seow recalled.  
“I went to a business school where most of the students aspired to be “investment bankers”. While I happily took that route for 10 years, I wanted to do more than what my colleagues and clients expected of me, and never shied away from working with others on projects outside my regular job. In hindsight, these experiences made me realise I had a penchant for business management, troubleshooting issues and creating solutions.”  
Although Seow may be seen as a “textbook finance expert”, he attributes much of his finance basics and business acumen to his experiences with start-ups, including co-founding and managing a restaurant in 2013, which has achieved and retained a Michelin star since 2017.  
“Nothing beats the “real-life” exposure of preparing and executing business plans, setting up accounts, managing capital expenditure and working cash cycles, retaining and motivating employees, as well as fire-fighting to ensure business continuity,” he added.  In Growth Gear   
These cumulative experiences have equipped Seow well for his current role. “Fu Yu is a stable and classic manufacturing company that has been in operation for more than four decades,” he noted.  
“As Managing Director, I bring my go-getter, entrepreneurial, and proactive mindset to transform Fu Yu from a company that has been sailing steadily to one that is forward-thinking, innovative and in growth mode.”  
Starting out in 1978 as a small tooling design, fabrication and fitting shop, Fu Yu Corporation has since grown into a market leader, providing vertically integrated services for the manufacture of precision plastic components and the fabrication of precision moulds and dies. The Group was listed on SGX Mainboard in June 1995.  
Today, the Group has an established presence in the region with manufacturing facilities located in Singapore, Malaysia and China. It has built a broad and diversified customer base of blue-chip companies in the printing and imaging, networking and communications, consumer, medical, automotive as well as power tool sectors.  
Its comprehensive capabilities range from precision tool design and fabrication and precision injection moulding to secondary processes, such as silk screen printing, ultrasonic welding, heat staking and spray painting, as well as sub-assembly.   
Looking ahead, Fu Yu targets to boost growth in two ways - strengthening the Group’s capabilities and beefing up its talent pool.  
“We’ve launched several initiatives to expand our capabilities, such as technology and machine upgrades, a new innovation arm to work on modern products and designs, as well as improving efficiencies,” Seow said.  
“These “hardware” upgrades will work hand in hand with our corresponding “software” upgrades, as we upskill our employees and hire fresh talent to drive innovation within the Group.”  
With these initiatives, Seow expects a long growth runway for Fu Yu, where the organisation will not only be a manufacturer, but also a front-runner in advanced manufacturing and technology.   
“While we’ve always been known as a reliable pair of hands in manufacturing, these upgraded capabilities will enable us to work with our customers even more closely in areas of complex manufacturing and material science.”  
In parallel with its strategy to build a diversified product portfolio for business resilience and stability, Fu Yu intends to optimise its business mix to keep pace with current market trends, Seow noted.  
This will see the Group channelling greater resources towards boosting its business in market segments that display longer term stability and growth potential, such as medical, automotive, as well as eco-friendly and smart home consumer products.  
The Group’s manufacturing operations will also shift into higher gear as the redevelopment of its new factory in Singapore enters the final stages of completion. The plant is scheduled to begin operations in the third quarter of 2022, barring unforeseen circumstances.  
“With its adoption of Industry 4.0, this new “smart factory” will serve as a showcase of the Group’s advanced manufacturing capabilities,” he pointed out.   
“In addition to higher precision manufacturing capabilities and increased automation, our new factory will also feature seamless workflow across its tooling, moulding and assembly operations to achieve higher operational efficiencies and a reduced carbon footprint.”  
The Group is also in the process of broadening value-added services to customers. Its new division - Corporate Development - will work with research institutes in Singapore and other partners in the region to explore research and development (R&amp;D) programs, as well as identify commercially viable technologies to augment its manufacturing services.  A Proactive Approach  
In this respect, COVID-19 has been a game-changer of sorts, Seow admitted. “COVID-19 was a timely reminder that we can never predict or pre-empt external conditions. However, we can control our own actions by proactively and continuously upgrading,” he added.  
“I want Fu Yu to be proactive and stay ahead of the curve, rather than be reactive, as that will then be too late. This is a mindset change which I am incorporating throughout the Group.”  
The pandemic also emphasised the need to have a greater control of one’s supply chain, or at least, have the ability to mitigate disruptions.   
“We’re taking things into our own hands to better manage our supply chain by centralising our procurement, which was previously done on a per site basis. To do this, we have already acquired and integrated a procurement company into the Group,” Seow noted.  
“We believe this is a differentiating factor from our competitors as it allows us to better manage our raw material prices and shorten lead times for delivery, which ultimately will benefit our customers and potentially attract new ones.”  
As for the Group’s Environmental, Social and Governance (ESG) goals, Seow is focused on optimising the Group’s energy consumption, which will help shrink its carbon footprint.   
“Some of the initiatives we’re working on include exploring the installation of solar panels in our factories, and integrating IoT technologies to improve real-time monitoring of utilities usage and machinery performance,” he said.  
“The challenge is to collect accurate data points that can be translated into useful information for our engineers to work on. With this, we can better measure and improve energy consumption by building an energy data model as a baseline which can be used to detect irregular utilities usage.”  
Apart from work, this 37-year-old father of a four-month-old son is passionate about golf.  
“I like how each game is different, even if you play at the same course. It doesn’t matter where your ball lands, because what matters most is the next shot, and how you proceed from the position you’re at, to the next position you want to get to. This applies in life as well.”  
Seow is also inspired by “a better me tomorrow”. “I try to be present in everything I do, which means being deliberate about learning from everything I experience, and making sure I am maturing and wiser every day.”  
And his advice to staff? “Be a do-er, don’t procrastinate and don’t make excuses,” he said. “Work hard, work smart, and always do the right thing.”  Fu Yu Corporation Ltd  
Fu Yu provides vertically integrated services for the manufacture of precision plastic components and the fabrication of precision moulds and dies. Since its inception in 1978, the Group has grown to become one of the largest manufacturers of high precision plastic parts and moulds in Asia. Today, the Group has established a strong presence in the region with manufacturing facilities located in Singapore, Malaysia and China. Leveraging on over 40 years of operating history, the Group has built a broad and diversified customer base of blue-chip companies in the printing and imaging, networking and communications, consumer, medical, automotive and power tool sectors.  
The company website is: www.fuyucorp.com  
Click here for the company's StockFacts page.  
For the year ended 31 December 2021 financial results, click here. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Fu Yu: Staying Ahead of the Manufacturing Curve

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
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<div>
<div>
<h2>Fu Yu Corp</h2>
<div>
<div>
<div>
<h3>Attractive ex-cash PE of 6.6x</h3>
<div>
<div>
<div>
Investment Thesis:
Trading at attractive ex-cash PE of 6.6x with improving core earnings. We believe FY20 was the bottom for Fu Yu’s core earnings as its operations were disrupted in 1H20. With the low base effect in FY20 and an improving economic climate, we are expecting core earnings to increase in FY21F.
Expansion in operating margins. Fu Yu has been taking steps to improve its gross profit margin through the consolidation of its production facilities in China, as well as increased use of automation to improve operational efficiency. A potential catalyst that could further improve its gross profit margins is the completion of the redevelopment of its Singapore factory at end-2021.
High cash and attractive dividend yield. As at end-1Q21, Fu Yu had a cash balance of S$108.2m, representing 44.9% of its market capitalisation. The stock is also currently offering a FY21F dividend yield of 5.0%.
Valuation: Maintain BUY with a higher TP of S$0.40. We raise our valuation peg to 15.2x (+2.0SD) FY21F earnings, from 13.0x previously as we remain positive on Fu Yu’s margin expansion and higher production. Fu Yu is currently trading at 12.0x FY21F earnings, below its 4-year historical mean, and at an FY21F ex-cash PE of 6.6x.
Where we differ: We are more optimistic on Fu Yu’s earnings and recovery.
Key Risks to Our View: Prolonged COVID-19 outbreak, increased competition, escalation of the US-China trade war.
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



Fu Yu Corp



Attractive ex-cash PE of 6.6x



Investment Thesis:
Trading at attractive ex-cash PE of 6.6x with improving core earnings. We believe FY20 was the bottom for Fu Yu’s core earnings as its operations were disrupted in 1H20. With the low base effect in FY20 and an improving economic climate, we are expecting core earnings to increase in FY21F.
Expansion in operating margins. Fu Yu has been taking steps to improve its gross profit margin through the consolidation of its production facilities in China, as well as increased use of automation to improve operational efficiency. A potential catalyst that could further improve its gross profit margins is the completion of the redevelopment of its Singapore factory at end-2021.
High cash and attractive dividend yield. As at end-1Q21, Fu Yu had a cash balance of S$108.2m, representing 44.9% of its market capitalisation. The stock is also currently offering a FY21F dividend yield of 5.0%.
Valuation: Maintain BUY with a higher TP of S$0.40. We raise our valuation peg to 15.2x (+2.0SD) FY21F earnings, from 13.0x previously as we remain positive on Fu Yu’s margin expansion and higher production. Fu Yu is currently trading at 12.0x FY21F earnings, below its 4-year historical mean, and at an FY21F ex-cash PE of 6.6x.
Where we differ: We are more optimistic on Fu Yu’s earnings and recovery.
Key Risks to Our View: Prolonged COVID-19 outbreak, increased competition, escalation of the US-China trade war.










(Non-SGX Report) Fu Yu Corp: Attractive Ex-Cash PE of 6.6x

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Singapore’s 10 most traded Technology stocks have averaged a 6.4% price gain in the month of April to 26 April, with performances ranging from 25.6% for Aztech Global to -1.4% for AEM. AEM’s marginal price decline coincided with S$17 million of net retail inflows over the 17 sessions.   
	 </li>
	<li>
The 10 stocks have outpaced global sector leaders in both the April MTD and 2021 YTD with respective median gains of 4.5% and 19.8%. By comparison the top quartile of global hardware technology and semiconductor stocks generated median 3.3% MTD gains and 10.4% YTD gains. 
	 </li>
	<li>On 21 April, Aztech Global reported net profit of S$13.2 million and revenue of S$115.9 million for 1QFY21 (ended 31 March) driven mainly by strong production volume and shipment of IoT and Data-communication products to customers. Since listing on 11 March, the stock has gained 18.8% from S$1.28 to S$1.52. </li>
</ul>
 

 Singapore’s 10 most traded Technology stocks by turnover in the 2021 year to 26 April, have generated average gains of 21.5% with the median gain at 19.5% over the period. Demand for semiconductors and electric components has been a key driver of the Technology Sector in early 2021. This has seen the Hardware and Semiconductor side of Technology stocks outpace the software side, both in Asia Pacific and across the globe In the 2021 year to 26 April. These comparative performances are illustrated in the chart below. E-commerce and Internet Media stocks have also been outpaced, with the top quartile of these online businesses by market value generating a median 3.8% gain in Asia Pacific and a 7.0% median gain across the globe.
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 <img src='https://api2.sgx.com/sites/default/files/2021-04/Capture_31.PNG' alt='Median Price Returns (%)' />
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 <div class='content-caption'>Median Price Returns (%)</div>
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While not a top 10 trade stock by turnover, Micro-Mechanics turnover in the 2021 year to 26 April has quadrupled from 2020 levels, propelling the stock to a rank as a top 150 stock by turnover in early 2021. Micro-Mechanics will report its 3QFY21 results on Friday 30 April. Back on 29 January, Micro-Mechanics reported its 1HFY21 (ended 31 Dec) net profit climbed 33.0% YoY to a record S$9.1 million which saw the manufacturer of precision tools used in the semiconductor industry raise its interim dividend by 20% to 6 cents a share. Referencing Industry forecast for the global semiconductor market to grow another 8.4% to US$469 billion in 2021, Micro-Mechanics CEO Chris Borch suggested that the semiconductor industry’s yearly growth rate could possibly accelerate to double digits which would translate into a massive industry with annual chip sales of over US$1 trillion in as little as seven years. Mr Borch attributed this skyrocketing demand for computers, mobile devices and the need for massive data centers as well as the proliferation of applications for chips (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/PSPH5V4VMRJOMLKL/f9dfc901c28311958bbd5d8d8a261305d025f07b3280b8a67599a24b3d9c8e7b">here</a> for more). The three most traded stocks of the 10 Technology stocks, Venture Corporation, AEM Holdings and UMS Holdings average a price-to-sales ratio of 2.9x, in-line with the median price-to-sales ratio for Asia Pacific’s top quartile of technology hardware and semiconductor stocks by market capitalisation. The 10 most traded technology stocks are tabled below and sort by price performances in the month of April to 26 April.  

<table class="table table-striped"><tbody>
<tr>
<td>
			Stock
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			MTD Price Change %
			</td>
			<td>
			YTD Price Change %
			</td>
			<td>
			Net Insti &amp; Net Prop Inflow YTD S$M
			</td>
			<td>
			Net Retail Inflow YTD S$M
			</td>
		</tr>
<tr>
<td>
			Aztech Global
			</td>
			<td>
			8AZ
			</td>
			<td>
			1,176
			</td>
			<td>
			25.6
			</td>
			<td>
			18.8
			</td>
			<td>
			-11.5
			</td>
			<td>
			11.4
			</td>
		</tr>
<tr>
<td>
			CSE Global
			</td>
			<td>
			544
			</td>
			<td>
			292
			</td>
			<td>
			9.6
			</td>
			<td>
			21.3
			</td>
			<td>
			10.3
			</td>
			<td>
			-10.2
			</td>
		</tr>
<tr>
<td>
			Nanofilm
			</td>
			<td>
			MZH
			</td>
			<td>
			3,533
			</td>
			<td>
			6.8
			</td>
			<td>
			21.4
			</td>
			<td>
			-8.6
			</td>
			<td>
			8.4
			</td>
		</tr>
<tr>
<td>
			Fu Yu
			</td>
			<td>
			F13
			</td>
			<td>
			241
			</td>
			<td>
			6.7
			</td>
			<td>
			20.8
			</td>
			<td>
			49.7
			</td>
			<td>
			-49.7
			</td>
		</tr>
<tr>
<td>
			ISDN
			</td>
			<td>
			I07
			</td>
			<td>
			276
			</td>
			<td>
			5.0
			</td>
			<td>
			56.8
			</td>
			<td>
			-1.7
			</td>
			<td>
			1.6
			</td>
		</tr>
<tr>
<td>
			Valuetronics
			</td>
			<td>
			BN2
			</td>
			<td>
			274
			</td>
			<td>
			4.1
			</td>
			<td>
			6.8
			</td>
			<td>
			-3.3
			</td>
			<td>
			3.3
			</td>
		</tr>
<tr>
<td>
			Frencken
			</td>
			<td>
			E28
			</td>
			<td>
			670
			</td>
			<td>
			2.6
			</td>
			<td>
			18.9
			</td>
			<td>
			12.1
			</td>
			<td>
			-12.0
			</td>
		</tr>
<tr>
<td>
			Venture
			</td>
			<td>
			V03
			</td>
			<td>
			5,975
			</td>
			<td>
			2.6
			</td>
			<td>
			6.0
			</td>
			<td>
			-10.1
			</td>
			<td>
			6.7
			</td>
		</tr>
<tr>
<td>
			UMS
			</td>
			<td>
			558
			</td>
			<td>
			725
			</td>
			<td>
			2.3
			</td>
			<td>
			25.9
			</td>
			<td>
			24.4
			</td>
			<td>
			-24.0
			</td>
		</tr>
<tr>
<td>
			AEM
			</td>
			<td>
			AWX
			</td>
			<td>
			1,145
			</td>
			<td>
			-1.4
			</td>
			<td>
			18.3
			</td>
			<td>
			-40.9
			</td>
			<td>
			43.1
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			6.4
			</td>
			<td>
			21.5
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			Median
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			4.5
			</td>
			<td>
			19.8
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: SGX, Refinitiv, Bloomberg (Data as of 26 April 2021) 
 

Aztech Global has been the strongest performer of the 10 most traded technology stocks in the month through to 26 April with a 25.6% price gain. On 21 April, Aztech Global reported net profit of S$13.2 million and revenue of S$115.9 million for 1QFY21 (ended 31 March) driven mainly by strong production volume and shipment of IoT and Data-communication products to customers (for more details click <a href="https://links.sgx.com/1.0.0/corporate-announcements/RPADIBXOVTNPI4JM/a70b093fef675c51054cf3f863d2fb5f0376b6890337e1ca912f59e332fa9b31">here</a>). Since listing on 11 March, the stock has gained 18.8% from S$1.28 to S$1.52 on 26 April. While AEM Holdings has declined 1.4% in the 2021 year to 26 April, the stock has seen increased net inflows by retail investors. For the 17 sessions, AEM Holdings led the 10 stocks in terms of net retail inflows with S$16.9 million of net retail inflows. By comparison, Valuetronics Holdings saw less than S$200,000 of net retail inflows, while the remaining eight stocks have seen net retail outflows since the end of March. In 1H20, the share price of AEM Holdings rallied 55.4%, which coincided with net retail outflows of S$34 million. During 2H20 the share price of AEM Holdings gained a more moderate 9.9% which coincided with net retail inflows of S$57.2 million, whilst the 18.3% gain has in the 2021 year to 26 April coincided with net retail inflows of S$43 million. In its FY20 (ended 31 Dec) Annual Report (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/5WPK0B14U1UUWZL0/5be9f1b4affaf89d1a786e7f568e64d15bdfaf376797692b42855c3ddcadff03">here</a>) the global leader in test innovation noted it had achieved compound annual growth rates of 32.8% in revenue and 44.7% in profit before tax over the past four years and reported record profit before tax of S$113.8 million for FY20. The market capitalisation of AEM Holdings has increased from S$19.5 million at the end of 2010 to S$1.1 billion at present.
</body></html>





Singapore’s 10 most traded Technology stocks have averaged a 6.4% price gain in the month of April to 26 April, with performances ranging from 25.6% for Aztech Global to -1.4% for AEM. AEM’s marginal price decline coincided with S$17 million of net retail inflows over the 17 sessions.    
	 
	
The 10 stocks have outpaced global sector leaders in both the April MTD and 2021 YTD with respective median gains of 4.5% and 19.8%. By comparison the top quartile of global hardware technology and semiconductor stocks generated median 3.3% MTD gains and 10.4% YTD gains.  
	 
	On 21 April, Aztech Global reported net profit of S$13.2 million and revenue of S$115.9 million for 1QFY21 (ended 31 March) driven mainly by strong production volume and shipment of IoT and Data-communication products to customers. Since listing on 11 March, the stock has gained 18.8% from S$1.28 to S$1.52. 

 

 Singapore’s 10 most traded Technology stocks by turnover in the 2021 year to 26 April, have generated average gains of 21.5% with the median gain at 19.5% over the period. Demand for semiconductors and electric components has been a key driver of the Technology Sector in early 2021. This has seen the Hardware and Semiconductor side of Technology stocks outpace the software side, both in Asia Pacific and across the globe In the 2021 year to 26 April. These comparative performances are illustrated in the chart below. E-commerce and Internet Media stocks have also been outpaced, with the top quartile of these online businesses by market value generating a median 3.8% gain in Asia Pacific and a 7.0% median gain across the globe.



      
    
    Median Price Returns (%)


While not a top 10 trade stock by turnover, Micro-Mechanics turnover in the 2021 year to 26 April has quadrupled from 2020 levels, propelling the stock to a rank as a top 150 stock by turnover in early 2021. Micro-Mechanics will report its 3QFY21 results on Friday 30 April. Back on 29 January, Micro-Mechanics reported its 1HFY21 (ended 31 Dec) net profit climbed 33.0% YoY to a record S$9.1 million which saw the manufacturer of precision tools used in the semiconductor industry raise its interim dividend by 20% to 6 cents a share. Referencing Industry forecast for the global semiconductor market to grow another 8.4% to US$469 billion in 2021, Micro-Mechanics CEO Chris Borch suggested that the semiconductor industry’s yearly growth rate could possibly accelerate to double digits which would translate into a massive industry with annual chip sales of over US$1 trillion in as little as seven years. Mr Borch attributed this skyrocketing demand for computers, mobile devices and the need for massive data centers as well as the proliferation of applications for chips (click here for more).  The three most traded stocks of the 10 Technology stocks, Venture Corporation, AEM Holdings and UMS Holdings average a price-to-sales ratio of 2.9x, in-line with the median price-to-sales ratio for Asia Pacific’s top quartile of technology hardware and semiconductor stocks by market capitalisation. The 10 most traded technology stocks are tabled below and sort by price performances in the month of April to 26 April.  




			Stock
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			MTD Price Change %
			
			
			YTD Price Change %
			
			
			Net Insti &amp; Net Prop Inflow YTD S$M
			
			
			Net Retail Inflow YTD S$M
			
		


			Aztech Global
			
			
			8AZ
			
			
			1,176
			
			
			25.6
			
			
			18.8
			
			
			-11.5
			
			
			11.4
			
		


			CSE Global
			
			
			544
			
			
			292
			
			
			9.6
			
			
			21.3
			
			
			10.3
			
			
			-10.2
			
		


			Nanofilm
			
			
			MZH
			
			
			3,533
			
			
			6.8
			
			
			21.4
			
			
			-8.6
			
			
			8.4
			
		


			Fu Yu
			
			
			F13
			
			
			241
			
			
			6.7
			
			
			20.8
			
			
			49.7
			
			
			-49.7
			
		


			ISDN
			
			
			I07
			
			
			276
			
			
			5.0
			
			
			56.8
			
			
			-1.7
			
			
			1.6
			
		


			Valuetronics
			
			
			BN2
			
			
			274
			
			
			4.1
			
			
			6.8
			
			
			-3.3
			
			
			3.3
			
		


			Frencken
			
			
			E28
			
			
			670
			
			
			2.6
			
			
			18.9
			
			
			12.1
			
			
			-12.0
			
		


			Venture
			
			
			V03
			
			
			5,975
			
			
			2.6
			
			
			6.0
			
			
			-10.1
			
			
			6.7
			
		


			UMS
			
			
			558
			
			
			725
			
			
			2.3
			
			
			25.9
			
			
			24.4
			
			
			-24.0
			
		


			AEM
			
			
			AWX
			
			
			1,145
			
			
			-1.4
			
			
			18.3
			
			
			-40.9
			
			
			43.1
			
		


			Average
			
			
			 
			
			
			 
			
			
			6.4
			
			
			21.5
			
			
			 
			
			
			 
			
		


			Median
			
			
			 
			
			
			 
			
			
			4.5
			
			
			19.8
			
			
			 
			
			
			 
			
		

 Source: SGX, Refinitiv, Bloomberg (Data as of 26 April 2021)  
 

Aztech Global has been the strongest performer of the 10 most traded technology stocks in the month through to 26 April with a 25.6% price gain. On 21 April, Aztech Global reported net profit of S$13.2 million and revenue of S$115.9 million for 1QFY21 (ended 31 March) driven mainly by strong production volume and shipment of IoT and Data-communication products to customers (for more details click here). Since listing on 11 March, the stock has gained 18.8% from S$1.28 to S$1.52 on 26 April.   While AEM Holdings has declined 1.4% in the 2021 year to 26 April, the stock has seen increased net inflows by retail investors. For the 17 sessions, AEM Holdings led the 10 stocks in terms of net retail inflows with S$16.9 million of net retail inflows. By comparison, Valuetronics Holdings saw less than S$200,000 of net retail inflows, while the remaining eight stocks have seen net retail outflows since the end of March. In 1H20, the share price of AEM Holdings rallied 55.4%, which coincided with net retail outflows of S$34 million. During 2H20 the share price of AEM Holdings gained a more moderate 9.9% which coincided with net retail inflows of S$57.2 million, whilst the 18.3% gain has in the 2021 year to 26 April coincided with net retail inflows of S$43 million. In its FY20 (ended 31 Dec) Annual Report (click here) the global leader in test innovation noted it had achieved compound annual growth rates of 32.8% in revenue and 44.7% in profit before tax over the past four years and reported record profit before tax of S$113.8 million for FY20. The market capitalisation of AEM Holdings has increased from S$19.5 million at the end of 2010 to S$1.1 billion at present.



Singapore Tech Stocks Advance in April on Hardware Demand

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<ul>
<li>
Since the end of 2019, global technology indices have gained 50%, with Singapore’s 10 most traded technology stocks keeping pace with the global trend, also averaging a 50% total return. The 10 stocks have averaged 15% gains in the 2021 YTD. 
	 </li>
	<li>
The 10 stocks have also seen similar increases in their P/E and P/B valuations to their global peers, with P/E and P/B ratios ~25% higher than end of 2019 levels. This has coincided with widespread increased demand for technology products and services, in addition to the widening field of technology application. 
	 </li>
	<li>Since 2019, Nanofilm and Aztech Global have listed on SGX. Since listing, Nanofilm has generated an 80% gain, while Aztech Global debuted recently on 12 March with an issue price of S$1.28. Together, the two debutants have a combined market value of S$4 billion. </li>
</ul>
 

Since the end of 2019, global technology indices have gained 50%, with widespread increased demand for technology products and services, in addition to the widening field of technology application. Despite technology stocks recently outpacing broader benchmarks, on an earnings basis, and in terms of book value, valuations of the largest technology stocks have increased in-line with the world’s biggest stocks, excluding technology plays. The Technology Sector has doubled its impact in most global indices over the past 10 years. 
As illustrated below, Singapore’s most traded Technology stocks, which are largely manufacturing-related businesses have seen increases in their P/E and P/B ratios since the end of 2019 that are also largely in line with global peers. These stocks include AEM Holdings, Venture Corporation, UMS Holdings, ISDN Holdings, Frencken Group, Fu Yu Corporation, CSE Global and Valuetronics.
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2021-03/Capture%201_10.PNG' alt='Median values' />
 </figure>
 <div class='content-caption'>Median values</div>
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While the valuations of the aforementioned eight technology stocks have moved much in-line with the largest global technology stocks, the performances were also on par with the eight stocks averaging 50% total returns since the end of 2019.  In the interim both Nanofilm Technologies International and Aztech Global have listed in Singapore. Since listing, Nanofilm Technologies International has generated an 80% gain, whilst Aztech Global debuted recently on 12 March with an issue price of S$1.28. For more details on Aztech Global, click <a href="https://www.sgx.com/research-education/market-updates/20210312-aztech-global-delighting-https:/www.sgx.com/research-education/market-updates/20210312-aztech-global-delighting-people-smarter-solutions-debutspeople-smarter-solutions-debuts">here</a>.

<table class="table table-striped"><tbody>
<tr>
<td>
			10 Most Traded Technology Stocks in 2021 YTD
			</td>
			<td>
			Code
			</td>
			<td>
			Market Cap S$M
			</td>
			<td>
			Total Return Since End of 2019 % 
			</td>
			<td>
			Total Return YTD%
			</td>
			<td>
			Net Insti Inflow YTD S$M
			</td>
			<td>
			Net Insti Inflow 2020 S$M
			</td>
		</tr>
<tr>
<td>
			AEM
			</td>
			<td>
			AWX
			</td>
			<td>
			1,077
			</td>
			<td>
			97.9
			</td>
			<td>
			13.3
			</td>
			<td>
			-29.8
			</td>
			<td>
			16.4
			</td>
		</tr>
<tr>
<td>
			Venture
			</td>
			<td>
			V03
			</td>
			<td>
			5,597
			</td>
			<td>
			24.4
			</td>
			<td>
			-0.7
			</td>
			<td>
			-82.4
			</td>
			<td>
			168.6
			</td>
		</tr>
<tr>
<td>
			UMS
			</td>
			<td>
			558
			</td>
			<td>
			667
			</td>
			<td>
			27.9
			</td>
			<td>
			15.7
			</td>
			<td>
			13.9
			</td>
			<td>
			18.6
			</td>
		</tr>
<tr>
<td>
			ISDN
			</td>
			<td>
			I07
			</td>
			<td>
			276
			</td>
			<td>
			181.2
			</td>
			<td>
			56.8
			</td>
			<td>
			0.4
			</td>
			<td>
			-3.3
			</td>
		</tr>
<tr>
<td>
			Nanofilm
			</td>
			<td>
			MZH
			</td>
			<td>
			3,083
			</td>
			<td>
			N/A
			</td>
			<td>
			5.9
			</td>
			<td>
			-25.6
			</td>
			<td>
			-30.2
			</td>
		</tr>
<tr>
<td>
			Frencken
			</td>
			<td>
			E28
			</td>
			<td>
			606
			</td>
			<td>
			58.5
			</td>
			<td>
			7.6
			</td>
			<td>
			6.1
			</td>
			<td>
			9.9
			</td>
		</tr>
<tr>
<td>
			Aztech Global
			</td>
			<td>
			8AZ
			</td>
			<td>
			959
			</td>
			<td>
			N/A
			</td>
			<td>
			N/A
			</td>
			<td>
			-13.6
			</td>
			<td>
			N/A
			</td>
		</tr>
<tr>
<td>
			Fu Yu
			</td>
			<td>
			F13
			</td>
			<td>
			230
			</td>
			<td>
			26.4
			</td>
			<td>
			15.1
			</td>
			<td>
			48.1
			</td>
			<td>
			1.3
			</td>
		</tr>
<tr>
<td>
			CSE Global
			</td>
			<td>
			544
			</td>
			<td>
			274
			</td>
			<td>
			2.9
			</td>
			<td>
			13.8
			</td>
			<td>
			7.3
			</td>
			<td>
			-19.4
			</td>
		</tr>
<tr>
<td>
			Valuetronics
			</td>
			<td>
			BN2
			</td>
			<td>
			272
			</td>
			<td>
			-19.2
			</td>
			<td>
			5.9
			</td>
			<td>
			-0.3
			</td>
			<td>
			-20.1
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			50.0
			</td>
			<td>
			14.8
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			Total
			</td>
			<td>
			 
			</td>
			<td>
			13,043
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			-75.8
			</td>
			<td>
			141.8
			</td>
		</tr>
</tbody></table>
 Note table does not include REITs and Business Trusts that invest in hi-tech assets, and also does not include Sunningdale Tech which is suspended. Data as of 16 March and sourced from SGX, Refinitiv and Bloomberg.
</body></html>





Since the end of 2019, global technology indices have gained 50%, with Singapore’s 10 most traded technology stocks keeping pace with the global trend, also averaging a 50% total return. The 10 stocks have averaged 15% gains in the 2021 YTD. 
	 
	
The 10 stocks have also seen similar increases in their P/E and P/B valuations to their global peers, with P/E and P/B ratios ~25% higher than end of 2019 levels. This has coincided with widespread increased demand for technology products and services, in addition to the widening field of technology application. 
	 
	Since 2019, Nanofilm and Aztech Global have listed on SGX. Since listing, Nanofilm has generated an 80% gain, while Aztech Global debuted recently on 12 March with an issue price of S$1.28. Together, the two debutants have a combined market value of S$4 billion. 

 

Since the end of 2019, global technology indices have gained 50%, with widespread increased demand for technology products and services, in addition to the widening field of technology application. Despite technology stocks recently outpacing broader benchmarks, on an earnings basis, and in terms of book value, valuations of the largest technology stocks have increased in-line with the world’s biggest stocks, excluding technology plays. The Technology Sector has doubled its impact in most global indices over the past 10 years.  
As illustrated below, Singapore’s most traded Technology stocks, which are largely manufacturing-related businesses have seen increases in their P/E and P/B ratios since the end of 2019 that are also largely in line with global peers. These stocks include AEM Holdings, Venture Corporation, UMS Holdings, ISDN Holdings, Frencken Group, Fu Yu Corporation, CSE Global and Valuetronics.



      
    
    Median values


While the valuations of the aforementioned eight technology stocks have moved much in-line with the largest global technology stocks, the performances were also on par with the eight stocks averaging 50% total returns since the end of 2019.  In the interim both Nanofilm Technologies International and Aztech Global have listed in Singapore. Since listing, Nanofilm Technologies International has generated an 80% gain, whilst Aztech Global debuted recently on 12 March with an issue price of S$1.28. For more details on Aztech Global, click here.




			10 Most Traded Technology Stocks in 2021 YTD
			
			
			Code
			
			
			Market Cap S$M
			
			
			Total Return Since End of 2019 % 
			
			
			Total Return YTD%
			
			
			Net Insti Inflow YTD S$M
			
			
			Net Insti Inflow 2020 S$M
			
		


			AEM
			
			
			AWX
			
			
			1,077
			
			
			97.9
			
			
			13.3
			
			
			-29.8
			
			
			16.4
			
		


			Venture
			
			
			V03
			
			
			5,597
			
			
			24.4
			
			
			-0.7
			
			
			-82.4
			
			
			168.6
			
		


			UMS
			
			
			558
			
			
			667
			
			
			27.9
			
			
			15.7
			
			
			13.9
			
			
			18.6
			
		


			ISDN
			
			
			I07
			
			
			276
			
			
			181.2
			
			
			56.8
			
			
			0.4
			
			
			-3.3
			
		


			Nanofilm
			
			
			MZH
			
			
			3,083
			
			
			N/A
			
			
			5.9
			
			
			-25.6
			
			
			-30.2
			
		


			Frencken
			
			
			E28
			
			
			606
			
			
			58.5
			
			
			7.6
			
			
			6.1
			
			
			9.9
			
		


			Aztech Global
			
			
			8AZ
			
			
			959
			
			
			N/A
			
			
			N/A
			
			
			-13.6
			
			
			N/A
			
		


			Fu Yu
			
			
			F13
			
			
			230
			
			
			26.4
			
			
			15.1
			
			
			48.1
			
			
			1.3
			
		


			CSE Global
			
			
			544
			
			
			274
			
			
			2.9
			
			
			13.8
			
			
			7.3
			
			
			-19.4
			
		


			Valuetronics
			
			
			BN2
			
			
			272
			
			
			-19.2
			
			
			5.9
			
			
			-0.3
			
			
			-20.1
			
		


			Average
			
			
			 
			
			
			 
			
			
			50.0
			
			
			14.8
			
			
			 
			
			
			 
			
		


			Total
			
			
			 
			
			
			13,043
			
			
			 
			
			
			 
			
			
			-75.8
			
			
			141.8
			
		

 Note table does not include REITs and Business Trusts that invest in hi-tech assets, and also does not include Sunningdale Tech which is suspended. Data as of 16 March and sourced from SGX, Refinitiv and Bloomberg.



Singapore Technology Stocks Keep Pace with Big Global Peers 

<div>
<div>
<div>
Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
Singapore Company Update
<div>
<div>
<div>
<h2>Fu Yu Corp</h2>
<div>
<div>
<div>
<h3>FY21F Ex-cash PE of 5.6x</h3>
<div>
<div>
<div>
Investment Thesis:
Attractive entry opportunity – ex-cash PE of 5.6x with improving core earnings. We believe FY20 was the bottom for Fu Yu’s core earnings as its operations were disrupted in 1H20. With the low base effect in FY20 and an improving economic situation, we are expecting core earnings to increase in FY21F.
Expansion in operating margins. Fu Yu has been undertaking steps to improve its gross profit margin through the consolidation of its production facilities in China, as well as increased use of automation to improve operational efficiency. A potential catalyst that could further improve its gross profit margins is the completion of the redevelopment of its Singapore factory at end-2021.
High cash level and attractive dividend yield. As at 31 December 2020, Fu Yu had a cash balance of S$106.6m, representing 48.8% of its market capitalisation. The stock is also currently trading at a FY21F dividend yield of 5.5%.
Valuation: Maintain BUY with a higher TP of S$0.35. We raise our valuation peg to 13.0x (+0.5SD) FY21F earnings, from 11.8x previously as we are positive on Fu Yu’s margin expansion. Fu Yu is currently trading at 10.9x FY21F earnings, below its 4-year historical mean, and at an FY21F ex-cash PE of 5.6x
Where we differ: We are more optimistic on Fu Yu’s earnings and recovery.
Key Risks to Our View: Prolonged COVID-19 outbreak, increased competition, escalation of the US-China trade war.
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
Singapore Company Update



Fu Yu Corp



FY21F Ex-cash PE of 5.6x



Investment Thesis:
Attractive entry opportunity – ex-cash PE of 5.6x with improving core earnings. We believe FY20 was the bottom for Fu Yu’s core earnings as its operations were disrupted in 1H20. With the low base effect in FY20 and an improving economic situation, we are expecting core earnings to increase in FY21F.
Expansion in operating margins. Fu Yu has been undertaking steps to improve its gross profit margin through the consolidation of its production facilities in China, as well as increased use of automation to improve operational efficiency. A potential catalyst that could further improve its gross profit margins is the completion of the redevelopment of its Singapore factory at end-2021.
High cash level and attractive dividend yield. As at 31 December 2020, Fu Yu had a cash balance of S$106.6m, representing 48.8% of its market capitalisation. The stock is also currently trading at a FY21F dividend yield of 5.5%.
Valuation: Maintain BUY with a higher TP of S$0.35. We raise our valuation peg to 13.0x (+0.5SD) FY21F earnings, from 11.8x previously as we are positive on Fu Yu’s margin expansion. Fu Yu is currently trading at 10.9x FY21F earnings, below its 4-year historical mean, and at an FY21F ex-cash PE of 5.6x
Where we differ: We are more optimistic on Fu Yu’s earnings and recovery.
Key Risks to Our View: Prolonged COVID-19 outbreak, increased competition, escalation of the US-China trade war.













(Non-SGX Report) Fu Yu Corp: FY21F Ex-Cash PE of 5.6x

Singapore

Fu Yu Corporation Limited manufactures and sells precision plastic injection molds and plastic components.  The Company also manufactures and sells plastic, aluminum parts, electronic products, and equipment for medical use.

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