Frencken Group - DBS Research 2023-11-23: Improving Margins & Outlook; Upgrade To BUY

Frencken Group - Improving Margins & Outlook; Upgrade To BUY

Frencken (SGX:E28) | SGinvestors.ioFrencken (SGX:E28)
  • Frencken (SGX:E28) reported 3Q23 revenue of S$184.4m (-5.6% y-o-y, +3% q-o-q). Though the gross profit margin contracted to 12.4% from 13.7% in 3Q22 due to lower revenue, inflationary cost pressures, and increased depreciation expenses, as Frencken continues to upgrade and expand its global manufacturing facilities, it is still a shade better than the 12.3% in 1H23.

3Q23 revenue in line but net profit above expectations

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Segmental performance – Semiconductor saw strong recovery q-o-q:

  • Semiconductor – revenue decreased 10.5% y-o-y to S$74.6m.
    • Europe saw higher orders from a key semiconductor equipment customer, but this was insufficient to fully compensate for lower sales in Asia, which was affected by the industry slowdown.
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  • Medical – revenue increased 19.5% y-o-y, mainly due to higher sales to a significant customer in Europe.
  • Analytical & life sciences – higher sales in Europe and Asia have led to the 22.4% y-o-y increase in revenue.
  • Industrial automation – the significant y-o-y decline of 63.5% in revenue was mainly due to the lower capital expenditure requirement of a key customer.
  • Revenue of the Integrated Manufacturing Services (IMS) division dipped marginally by 5.7% y-o-y to S$24.3m in 3Q23, mainly due to lower sales in the automotive and consumer & industrial electronics segments.

Sequential improvement in net margins; expect continued recovery from trough margin of 3% registered in 1Q23.

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Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Lee Keng LING DBS Group Research | 2023-11-23

Read also DBS's most recent report:
2024-02-28 Frencken Group - Recovery Intact; A Stellar FY23 Boosted By Strong Performance In Europe.

Price targets by 2 other brokers at Frencken Target Prices.

Listing of research reports at Frencken Analyst Reports.

Relevant links:
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