Frencken - CGS-CIMB Research 2022-08-12: Expecting H-o-h Revenue Improvement In 2H22

Frencken - Expecting H-o-h Revenue Improvement In 2H22

  • Frencken (SGX:E28)'s 1H22 revenue rose 3.6% y-o-y to S$389m, in line at 97% of our S$402m forecast and formed 46% of our and Bloomberg consensus full-year forecast respectively. The Mechatronics division revenue (87.3% of 1H22 revenue) grew 6.2% y-o-y while the Automotive division (12.5% of 1H22 revenue) saw a 11.5% y-o-y revenue decline.
  • Frencken's 1H22 net profit fell 16.6% y-o-y to S$26.1m. 1H22 net profit (S$26.1m) was in line at 102% of our S$25.7m forecast and formed 47% and 46% of our and Bloomberg consensus full-year forecast respectively.
  • Frencken's 1H22 gross profit margin fell 1.79% points y-o-y and 0.58% points h-o-h to 15.63% (1H21: 17.42%, 2H21: 16.21%). The decline in the gross profit margin was due to inflationary cost pressures and additional depreciation expenses as the group invested to upgrade its machineries and expanded capacity globally.
  • Frencken's management guided that 2H22F revenue is expected to post a moderate increase compared with 1H22. It expects the semiconductor, medical, analytical and life sciences and automotive segments to post h-o-h increases in revenue, but projects the industrial automation segment to see a h-o-h decrease in revenue.
  • On the margin front, Frencken has managed to pass on some of the cost increase to customers. Some of these benefits may be offset by the group’s ongoing investments in its facilities in Europe, Malaysia and Singapore to pursue additional revenue opportunities for FY23F and beyond.
  • We reiterate our ADD call and our target price for Frencken is raised slightly to S$1.75.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

William TNG CFA CGS-CIMB Research | 2022-08-12
SGX Stock Analyst Report ADD MAINTAIN ADD 1.75 UP 1.720

Previous report by CGS-CIMB:
2022-07-04 Frencken Group - Overcoming Short-Term Challenges

Target prices by 3 other brokers at Frencken Target Prices.
Listing of broker reports at Frencken Analyst Report.

Relevant links:
Frencken Share Price History,
Frencken Announcements,
Frencken Dividends & Corp Actions,
Frencken News Articles


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