SG Technology Stocks - Shenzhen Goes Into Lockdown
AZTECH GLOBAL LTD. (SGX:8AZ)
ISDN HOLDINGS LIMITED (SGX:I07)
NANOFILM TECHNOLOGIES INTL LTD (SGX:MZH)
- The Straits Times on 13 Mar 2022 reported that China's tech hub of Shenzhen came under a citywide lockdown and Shanghai has ordered residents to avoid all but essential travel as well as closed schools to contain the spread of the COVID-19 virus.
- On 7 March, Hong Kong-listed IDT International (167 HK) announced that its factory in Shenzhen will temporarily discontinue production with effect from 5 March 2022 due to the COVID-19 pandemic.
- Aztech (SGX:8AZ)’s factories are in Dongguan, China, which is near Shenzhen. Retain ADD rating and a P/E (target multiple – 12.0x) based target price of S$1.59.
- The current COVID-19 situation is not likely to affect ISDN (SGX:I07) directly but there could be delivery delays if its customers are affected. China accounted for 74% of ISDN’s FY21 revenue. Retain ADD rating and a P/E (target multiple – 12.3x) based target price of S$0.96.
- NanoFilm (SGX:MZH)’s main factories are located in Shanghai, China. Plant shutdowns will have a negative short-term impact as NanoFilm has no other factories of scale elsewhere. If shutdowns occur, NanoFilm will have to catch up on production once operations normalise. Retain ADD rating and a P/E (target multiple – 23.3x) based target price of S$3.50.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-03-17
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