Frencken - RHB Invest 2023-05-24: Awaiting The Semiconductor Recovery To Kick In

Frencken - Awaiting The Semiconductor Recovery To Kick In

Frencken (SGX:E28) | SGinvestors.ioFrencken (SGX:E28)
  • We maintain our NEUTRAL call, as Frencken’s 1Q23 update indicated weak demand and higher operating costs amid on-going excess inventory in the chip sector. We see low utilisation rates from expanded capacities straining near-term margins, as the semiconductor market waits for inventory levels undergo a correction.
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1Q23 net profit was below our estimate

  • Frencken (SGX:E28)'s 1Q23 net profit was below our estimate, at S$5.2m (-60% y-o-y). This was booked on a lower revenue of S$173m, marking a 13% y-o-y decline from 1Q22’s S$198m.
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  • Meanwhile, revenue for the integrated manufacturing services division dropped by 10% y-o-y, as sales at both the automotive & consumer and industrial electronics segments declined.
  • Frencken’s gross profit margin narrowed to 12.3% (-3.1ppts y-o-y). 1Q23 net profit plunged by 60% y-o-y to S$5.2m as a result of lower margins and higher costs.

Excess chip inventory continues to dominate sector trends.

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Alfie Yeo RHB Securities Research | 2023-05-24

Read also RHB's most recent report:
2023-11-27 Frencken - Expect Earnings To Bottom Out; Upgrade To Buy.

Previous report by RHB:
2023-09-11 Frencken Group - Still Cautious On Near-term Recovery.

Price targets by 3 other brokers at Frencken Target Prices.

Listing of research reports at Frencken Analyst Reports.

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


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