Key features of ‘The Edge’ for this week

Key features of ‘The Edge’ for this week:
1) TSH: Co. featured positively, with coverage on its expanding business. Note that while homeland security services makes up main rev for grp, future growth could come in its consumer electronics business where co. specializes in original design manufacturing of products like ebooks and scanners for big retailers....

Cites that grp will be launching new version of tablets soon which can run on Android and priced 4x cheaper than Ipad. Adds that grp’s ODM model allows co. to ride on customer’s name and limit its credit risk from customers…..

We note that TSH recently increased its stake in its ODM business from 37.5% to 100% in Jan, resulting in consolidated earnings of $28.2m for 1H10, up 144% YoY. CIMB has a buy call with TP of $0.255.

2)Kian Ann Engineering: Feature tips grp to ride on the construction and commodities boom, as construction companies rushes to replenish parts and components spurred by higher demand in the construction, mining and plantation industries. Notes that 70% of grp’s revenue comes from the mining and forestry industry, with Asean contributing to a significant part of its revenue….

S&P which has coverage on stock, highlights that with strong GDP growth in most Asian countries, demand for heavy equipment spare parts & components are expected to be robust for at least the next 2 years, supported by strong commodity prices in the mining plantation and timber industries to benefit grp. Expect earnings growth of 2% to $13.5m in FY11 and 5% in FY12…

We note that stock currently trades at 0.7x PB with net cash of $11.2m and grp’s strong balance sheet will enable it to expand or pay more dividends. For FY10, div was 1c/ share, representing a dividend yield of 5% and payout ratio of 33%. SIAS Research has Invest rating with $0.255 target.

3) TTJ Holdings: Feature highlights the growing interests in small construction stocks among investors as they are viewed as beneficiaries of infrastructure spending. Highlights recent prolific projects of grp like the Double Helix Bridge and recent contract wins on Downtown Lines 2 to install temporary struts and construct civil defense doors…..

Note that grp is currently targeting Jurong Island projects and PUB’s phase 2 of Singapore’s Deep Tunnel Sewer and other high profile projects like the Sports Hub. With the Building and Construction Authority projected to spend $18b and $25b for 2011-12 respectively, grp could potentially expand its orderbook ($110m)….

We note that grp currently has 3 structured steel production facilities with a total annual capacity of 42,000 tones and current orderbook of $110m, trading at 7.6x FY10 PE and 1.08 P/NTA.

4) Privatization plays: Highlights recent privatizations of thinly traded stocks like Soilbuild, MCL Land and potentially IDT Holdings, to spark renewed interests in the privatization plays. Note that thinly traded companies struggles to raise capital from the equity markets, has to keep up with the costs of keeping a listing status and bares extra responsibilities of adhering to compliance issues, in which privatization could unlock value for shareholders……

UOBKH indentifies Fuxing China group, GP batteries, GP industries, HTL international and Synear Food holdings as its top privatization plays…

While Kim Eng’s top privatization picks are Gallant Ventures and S-Chips like China Fibretech, Sino-Construction, China Sports, China Hongxing and Qian Feng Fabritech….