LongCheer

DBS initiates Buy with $1.22 target. Longcheer trades at only 6x FY11 PE, 1.4x NTA plus 5-6% yield, and is 55% cheaper than sector PE of 14x. It also has a strong balance sheet, with net cash of RMB425m (S$86.7m or 33% of market cap). Longcheer is a proxy to the strong handset demand in Asia’s emerging markets. The biggest wildcard is mobile lottery, which is expected to start contributing from 2QFY11.