- Choo Chiang (SGX:42E) continues to be a beneficiary of the construction recovery and a buoyant resale property market with FY22 revenue and profit coming in at S$87.6mln (+10.3% y-o-y) and S$9.0mln (+5.3% y-o-y) respectively.
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- Trading at S$0.335 and capitalized at S$69.6mln, Choo Chiang’s net cash position of S$20.1mln represents 28.9% of market cap. Ex-cash P/E of 5.2x and FY22 ROE of 15.7% are attractive.
- We maintain BUY on Choo Chiang with an unchanged target price of S$0.48, pegged to 10.5x FY23F P/E (15% discount to mean P/E).
Choo Chiang Holdings - Outlook
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- Choo Chiang is shielded from interest-rate hikes as it does not have any interest-bearing debt. A portion of its S$23.3mln cash pile is invested in fixed deposits which can provide additional interest income in FY23F.
- A potential divestment of its non-core investment properties can also be reinvested into the higher-yielding distribution business and act as a share price catalyst.
Construction recovery and a booming property market.
- Read more at SGinvestors.io.
