Trendlines

Trendlines: Jumped 7.5% to $0.174 in early trading, following an initiation from a local broker with a Buy rating and TP of $0.28.

The house cited that Trendlines is considered the best incubator in the Medtech space and is the only government franchised incubator in Agtech space. These segments see strong growth prospects from the ageing population and growing demand for sophisticated medical devices, which would help attract funds into the company.

Trendlines has a portfolio of 46 companies, of which 17 are in commercialisation stage. Currently, three companies within its portfolio are exploring M&A opportunities.

The group's track record consists of:
1) raising follow-on funds for 75% of its portfolio companies; and
2) divesting five portfolio companies over the past five years at 3x - 67x its investment.

Key risks include volatile earnings and lack of exits, which may lead to negative cash flow. The house estimates that Trendlines has enough cash for the next 2.5 years without an investment exit.

Trendlines is trading at a 55% discount to its peers, which average 1.3x P/B.