Broadway Industrial Group (S$1.01) - Cheapest HDD-related stock
During our one-day roadshow with Broadway in Singapore last Friday, we gathered that the company continues to experience solid order flow from its two major HDD customers, in line with the sterling results released by several SGX-listed HDD component suppliers. It is also seeing good traction in its non-HDD component operations as well as plastic foam packing business. Broadway remains a steal at 5.2x CY08 P/E, in our opinion, for its commanding market share, size, healthy ROEs and earnings prospects. We believe our 10x target P/E (S$1.93) is not excessive, supported by valuations paid by private equities and companies in recent M&As in the HDD component space. Reiterate Outperform for its solid growth outlook and undemanding valuations. We see catalysts from positive newsflow in the HDD industry and healthy set of results.
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