“Despite the continued y-o-y decline in revenue and earnings, we are upbeat on the q-o-q turnover growth and the net profit improvement from Frencken’s key segments,” he adds.
In addition to his “buy” call, Yeo has lifted his target price to $1.45 from 97 cents previously.
“We now turn positive on the stock ahead of an anticipated recovery next year,” he says. His higher target price is premised on better earnings for the FY2024 and a higher target P/E of 14x from 10x previously.
In line with his expectations of a better outlook, Yeo has also raised his revenue estimates for the FY2023 to FY2025 by 2% to 7%. In addition, his earnings estimates have increased by 7% to 12% for the FY2024 to FY2025 to reflect expectations of better revenue and margins ahead.
As at 1.21pm, shares in Frencken are trading 1 cent lower or 0.89% down at $1.12.
