Singapore Stock Trading Case Study: Sunningdale Tech (UPDATE)

What is fair investing weather today could be a nasty stock market squall tomorrow, and investors would do well to bank on resilient stocks…

Dr. Clemen Chiang 06.Jun.2017

What is fair investing weather today could be a nasty stock market squall tomorrow, and investors would do well to bank on resilient stocks able to weather such storms as they come. Plastic mould and injection company, Sunningdale Tech demonstrates such elasticity, as recent developments point to an ability to shine in spite of overcast economic conditions.

Established in 1984, Sunningdale is engaged in providing a one-stop turnkey plastic solutions, with capabilities ranging from product & mould designs, mould fabrication, injection moulding, micro-precision engineering, complementary finishings, through to the precision assembly of complete products.

The Group is mainly focused on four operating segments: Automotive, Consumer/IT, Healthcare, and Mould Fabrication. Each segment has contributed 36%, 40%, 7% and 17%, respectively, to its 2016 fiscal year sales.

The Automotive segment produces faceplates for automotive audio systems and other car parts and accessories; while the Healthcare division produces scoops, caps, and drug delivery and diagnostic devices. The Consumer/IT segment manufactures mobile phones, inkjet cartridges and other telecom and consumer products; while Mould Fabrication designs and manufactures moulds used for plastic injection parts.

The rising Sun
Sunningdale Tech Ltd. is a globally recognised plastic products manufacturer with over 20 years of operations and manufacturing facilities in nine countries, which include China, Hong Kong, Brazil, and Mexico.

Based on a DBS Research Report, the Group’s competitive advantages lie in its advanced manufacturing capabilities, global manufacturing footprint, and scale. The Group also stands out for its diversified customer base — majority of its customers contribute between 3–5% each to group sales, which greatly reduces customer concentration risk commonly seen among small-mid cap peers.

Sunningdale is a beneficiary of the broad-based substitution for functional plastics and positive underlying trends in Automotive, Consumer/IT and Healthcare sectors.

The positive and growing demand across the Group’s three key end-sectors is forecasted by industry experts to grow in high single-digit to low-double digit levels p.a. into 2020. Given its track record and strong business fundamentals, it is believed that Sunningdale is well-positioned to take on complex projects that may surface across the Automotive, Consumer/IT and Healthcare space to deliver further growth.

SGX market information on Sunningdale Tech Ltd.
With its world class engineering capabilities, global presence and diversification, DBS believes that Sunningdale Tech Ltd. deserves to trade closer to larger US peers’ 20x FY18F PE and at a premium over local precision plastic peers.

On top of that, the dividends have been on a steady uptrend from 2014 through 2016.

The current top shareholders of the company include Merrill Lynch (Singapore) Pte Ltd (Spiking Billionaire) and United Overseas Bank Nominees (Private) Limited with over 17 million direct shares each. Mr Koh Boon Hwee (Spiking Millionaire) currently holds 29.95 million direct shares of the said company with total share value of up to SGD 58 million.

Looking at its steadily increasing stock prices on the SGX stock market, Sunningdale is definitely a good investment. You can keep track of the Group’s performance on the SGX stock market at https://spiking.com/sgx/bhq-sunningdale-tech-ltd.

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