Dutech: CIMB initiates coverage with Add call with TP of $0.61. Dutech is Asia’s largest safe manufacturer with global customers. It fulfils over 50% of the safe demand for Diebold and Wincor Nixdorf, the no.2 and no.3 ATM makers that control 30-40% global ATM market share.
The house thinks this is a high-quality S-chip that deserves fair treatment, given its global business profile, management accumulating shares, and shipment record. Dividend and successful M&A track record is also notable.
Looking ahead, the house sees earnings outlook improve from potential contract wins, lower costs from steel price, as well as the weakening of the Rmb vs USD.
Valuation is compelling, trading at 6.4x forward P/E and 2.3x EV/EBITDA. TP of 0.61¢ implies P/E of 9.9x FY16 P/E, versus peers at 16.2x
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