“Given world class engineering capabilities, global presence and diversification, we believe Sunningdale deserves to trade closer to larger US peers’ 20x FY18F PE and at a premium over local precision plastic peers,” says DBS lead analyst Ling Lee Keng.
According to Ling, Sunningdale has a lower customer concentration risk compared to local peers.
The group has a diversified MNC customer base, with the majority of customers each contributing only between 3-5% to group sales.
This “greatly reduces customer concentration risk commonly seen among small-mid cap peers,” Ling says in a report on Thursday.
In addition, Ling says Sunningdale offers higher growth compared to the bigger players. The analyst projects that Sunningdale’s core earnings will grow steadily at 9% CAGR over FY16-18F.
“Owing to improved plastic material properties, and higher cost efficiency, precision plastic components are increasingly replacing their metallic counterparts in a wide range of industrial applications,” Ling says.
Ling adds that Sunningdale is well-poised to ride on its track record and strong business fundamentals to take on complex projects and deliver further growth.
Shares of Sunningdale Tech are trading 7 cents higher at $2.02 as at 12.53pm.
