Px/Tgt 22/35
Initiate Coverage with CONVICTION BUY for +60% upside.
ISDN is a leading engineering solutions provider and serves booming industries such as semicon, medical and transportation. The stock is cheap and undervalued compared to it' s precision engineering peers.
The stock is unloved and forgotten by the market despite its strong and improving fundamentals. Net cash account for close to 30% of its market cap and the stock is trading at current 6x vs peers 11x. Near term catalyst include solid 2Q17 results. Other catalysts include accretive M& A as it looks to benefit from China' s OBOR. In addition, 2018/19 earnings will be driven by initial contribution from its hydropower plants in Indonesia.
The group is a potential beneficiary of China' s one belt one road policy given ISDN' s presence and partnerships with local China railway companies.
We initiate ISDN SP at Buy with a conservative target of 35 cents, which suggests an upside of 56%. Report link attached.
Cash as a % of market cap is 29% and FY17 div yield is a decent 3%. FY17 PE of 7.7x / 0.5x PB is undemanding and possible catalysts include share buybacks/higher div payout, solid 2Q17 results and positive newsflow on China one belt one road ventures.
ISDN is a leading engineering solutions provider and serves booming industries such as semicon, medical and transportation.
The group is a potential beneficiary of China' s one belt one road policy given ISDN' s presence and partnerships with local China railway companies.
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=40353& h=cab36570c534dcc2d3649d43dbe3e903