Nam Cheong

Nam Cheong: OSKDMG highlights that Nam Cheong will release its results before the market opens on Friday. The house expects net profit of Rm55m, up 35% y-o-y, on the back of a Rm1.7b-strong orderbook (before recognitions). Nam Cheong is trading at 9x FY14F EPS and 38% core PATMI growth. The recent share price pullback due to global market jitters is non-company-specific and presents an attractive entry point. BUY before the results, with an unchanged TP of $0.53. Three months ago, the house was45% above consensus’ FY16F estimates, and expected consensus to upgrade from zero y-o-y growth assumptions. As Figure 1 shows, this is now in progress, and the house believe more FY15/16F upgrades may follow in the upcoming quarters as Nam Cheong continues to deliver strong margins and earnings growth. The recent share price pullback has nothing to do with Nam Cheong as a company, and is entirely due to global market jitters caused by Argentina’s default, European worries, as well as other macroeconomic factors. Think that the company’s consistent operational outperformance may reassure investors while the stock’s 7.5/6.6x FY15/16F P/Es continue to look undemanding. We recommend accumulating before the 2Q14 results are released on Friday morning, and ahead of any new sales contracts.