Man Wah Holdings Ltd: More reasons to cheer

Summary: Man Wah Holdings Ltd (MWH) recently revealed its 3Q08 performance. Top-line grew 60.4% to HK$403.4m, bringing its 9M08 revenue to HK$1.1b, largely in line with our forecasts. MWH opened 25 new Cheers stores in 3Q08, bringing the total tally to 195 stores as at December 2007. This puts it on track to meet its target of opening 220 stores by FY08. Its increased retail penetration, together with improvement in same store sales, will continue to drive revenue growth. MWH posted notable improvements in sales across all its geographical segments. While the PRC segment posted the most impressive performance with a 128.6% surge in sales, the North America, Europe and Hong Kong segments shone with sales growth of 52.5%, 27.3% and 70.5%, respectively. Having seen a steep correction in line with the recent market volatility, MWH is trading at a mere 5.1x FY08 PER, which is undemanding given its strong growth prospects. We maintain our BUY rating and fair value estimate of S$0.99. (Lee Wen Ching)

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Micro-Mechanics: Good growth continues in 2Q08

Summary: Micro-Mechanics Holdings (MMH) posted a good set of 2Q08 results over the weekend, extending its bright start to FY08, with revenue up 10.4% YoY (+1.4% QoQ) at S$9.7m, while net profit jumped by a larger 19.6% YoY (+1.1% QoQ) to S$2.5m. For the first half, revenue rose 8.7% to S$19.2m and earnings increased 13.9% to S$5.0m, both meeting 48.1% of our FY08 estimates. MMH also declared an interim dividend of S$0.02/share, versus S$0.015 for 1H07. Going forward, the semicon industry outlook remains cautiously optimistic, with industry watchers looking at 6-11% growth, versus just 3% in 2007, but there is a risk that this growth can be derailed by a recession in the US. We will be meeting with management later to find out more about its growth strategies and measures it will take to combat any hiccups. Our fair value remains at $0.78, based on an undemanding 10x FY08 PER, and we see room for further upgrade if the semicon industry recovers strongly as expected. We also retain our BUY rating. (Carey Wong)

NEWS HEADLINES

- SMRT Corp's 3Q net profit fell 5.3% YoY to S$38.3m, largely because the previous corresponding period's profits included exceptional items.

- Wing Tai Holdings reported a 19% YoY drop in 2Q net profit to S$43.6m, with revenue falling a whopping 59% to S$110.7m.

- Singapore's monthly factory output unexpectedly fell a seasonally adjusted 4.7% in December. This has taken 2007 manufacturing growth to 5.8%, half the pace of 11.5% in 2006.

- Youcan Foods International has launched a new range of 23 ice cream products in China, extending its reach to new cities in line with its nationwide expansion plans.

- The Ascott Group's 4Q net profits more than tripled on the back of divestment gains to S$45.4m from S$13.6m a year ago. 4Q revenue rose 14% YoY to S$116.5m.

- Approximately 136m new units in CapitaRetail China Trust were fully subscribed, under a private placement at an issue price of S$1.36 per unit.

- Beng Kuang Marine said it has secured orders worth S$4.4m from key customers.

- According to Reuters, China-based crane manufacturer Yongmao Holdings has priced its Singapore IPO at S$0.35, below its indicative price range of S$0.36-0.40. Yongmao, a unit of crane operator Tat Hong Holdings, seeks to raise about S$39m from the IPO.