Frencken

Frencken: Seeing quite a lot of recent interests on Frencken Group recently, with two Buy calls last Friday and a feature in The Edge magazine as well. The electronic contract manufacturer recently saw a turn around from a loss of $12m in 2012 to $17m profit in 2013, and the positive performance is expected to continue, with the group benefitting from the recovery in demand of their key automotive, medical, semiconductor customers in Europe (62% of sales) Its 2014 growth of 20% compares favourably to its forward PE of 6x; which is also undemanding compared to sector peers such as Amtek’s 10x despite similar return and growth profiles. Amtek's share price has been pretty strong after it acquired Interplex which manufactures precision parts for end segments in the automotive and mobile segment, so given Frencken’s similar strong focus in the automobile segment and its more favourable valuations, DMG is tipping Frencken as its preferred sector pick versus Amtek. Amtek’s P/B of 0.5x and dividend yield of 5% provides down-side support.