Skylink’s business model spans several segments including long-term commercial vehicle leasing and fleet management, vehicle credit and hire-purchase financing, as well as engineering services that include maintenance, repairs and overhaul (MRO), refurbishment and bodywork solutions.
Thanks to these businesses, Skylink Holdings offers investors many pluses including resilient leasing cash flows through its recurring lease income and scalable and capital-efficient engineering growth, as seen by its recent contract wins from SBS Transit and F&N Foods, along with the acquisition of bodywork customisation specialist Chuang Li Partners.
Skylink’s vehicle credit and hire-purchase financing will also serve as a profit accelerator for the business with its high-margin products. These contribute steady earnings with low credit losses under conservative provisioning, says Ng.
In addition, the company is supported by multiple upside catalysts such as the expansion of its fleet, the adoption of commercial electric vehicles (EVs), as well as new engineering or bodywork contract wins, factors which offer “meaningful optionality” over the medium term.
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Ng’s initiation target price of 44 cents is based on a forward earnings per share (EPS) of 3.98 cents against the average P/E of 11.1 times.
His target price also represents an upside of 49.2% to Skylink’s last-traded price of 29.5 cents as at the mid-day break on Dec 18.
