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Does Chuan Hup offer any hidden value?

Matthew Shim
Matthew Shim4/2/2018 07:30 AM GMT+08  • 4 min read
Does Chuan Hup offer any hidden value?
SINGAPORE (Apr 2): Chuan Hup Holdings showed up in our Singapore growth screener on March 19 with a five-year earnings before interest, taxes, depreciation and amortisation CAGR (compound annual growth rate) of 47% on a 12-month trailing EV/Ebitda multipl
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SINGAPORE (Apr 2): Chuan Hup Holdings showed up in our Singapore growth screener on March 19 with a five-year earnings before interest, taxes, depreciation and amortisation CAGR (compound annual growth rate) of 47% on a 12-month trailing EV/Ebitda multiple of 4.4 times. During the trade tariff tantrum that followed, Chuan Hup stood resolute at 30 cents as the Straits Times Index and its components gyrated. Its share price currently trades at a discount to its net asset value of 39.30 cents (30.61 US cents), based on its most recent results announcement and financials dated Dec 31. Chuan Hup’s NAV has fallen 3.8% since June 30, 2017, owing to a US$14.8 million ($19.4 million) decline in accumulated profits in 1HFY2018 (Chuan Hup has a June year-end).

What does Chuan Hup actually do? It appears to be largely an investment holding company, with a portfolio of investments in two main sectors: electronics and property. The largest contributor to revenue and earnings is PCI, a printed-circuit board (PCB) manufacturer listed on the Singapore Exchange. It accounted for 70.2% of Chuan Hup’s revenue in FY2017. The property segment contributed 28.6% to revenue.

PCI’s core business involves the manufacturing of PCBs, user interface panels and complete box-build projects. PCI also provides end-to-end manufacturing supply chain services, which include design, manufacturing engineering, material sourcing and procurement, assembly, testing and logistics. Chuan Hup owns 76.7% of PCI and has two board representatives on PCI’s board.

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