In China, the group has manufacturing facilities in Chuzhou, Guangzhou, Shanghai, Suzhou, Tianjin and Zhongshan.
Already, Sunningdale’s automotive segment has been suffering from poor end-consumer demand.
For FY2019 ended December, the group reported a 9.2% drop in revenue from its automotive segment to $245.1 million, from $269.9 million a year ago.
The group attributed the decline to a decrease in orders from customers as a result of weakening demand across global automotive markets, as well as certain projects reaching end-of-life.
Meanwhile, revenue from Sunningdale’s consumer/IT and mould fabrication segments fell 7.7% and 6.1%, respectively.
Only the group’s smallest segment – healthcare – managed to eke out an increase in revenue for FY2019. Revenue from its healthcare segment edged up by 1.0% to $57.3 million.
This brought total group revenue to $673.8 million for FY2019, some 7.3% lower than a year ago.
FY2019 earnings plunged 73.2% to $8.0 million, on the back of the weaker top-line performance as well as the absence of a one-off gain of $13.1 million recorded in FY2018 on the disposal of a property.
However, CGS-CIMB’s Tng notes that the FY2019 net profit was in line with the brokerage’s expectation. “Excluding foreign exchange losses of $1.1 million and retrenchment costs of $1.3 million, core net profit was $11.9 million,” he adds.
The market, though, has jittery on Sunningdale’s prospects, in light of the automotive slowdown and the coronavirus outbreak.
Year-to-date, the counter has slipped 9.8% to close at $1.20 on Mar 3. It is also trading some 15.5% lower than a peak of $1.42 in March last year.
For now, Tng believes that the downside from the automotive segment slowdown has been priced in.
Meanwhile, he forecasts a dividend yield of 6.6% for FY2020, which should provide some share price support.
Tng also notes that Sunningdale has net gearing of 0.1 times as at end-December, which “could throw up acquisition opportunities” amid the current market conditions.
CGS-CIMB is lowering its target price for Sunningdale down slightly to $1.10, from $1.14 previously, after factoring in the larger outstanding number of shares due to employee stock options exercised in FY2019.
As at 12.50pm, shares in Sunningdale are trading flat at $1.20, implying an estimated forward core price-to-earnings (P/E) ratio of 14.6 times and price-to-book value (P/BV) of 0.6 times for FY2020F.
