Summary: The banking arena has seen more self-service facilities being set up over the years to ease pressure on headcount. A study done by the Retail Banking Research Ltd has estimated the growth of ATMs worldwide at 35% in the last 6 years, and we expect China's ATM market to outpace global growth in the coming years. Dutech Holdings Ltd (Dutech), a manufacturer of ATM safes, is a direct beneficiary of this booming market. Being the only Asian company that has obtained UL certification, it enjoys a monopolistic position in an environment with high barriers to entry. It has an edge over its European and American competitors as it operates from a low cost production base in Nantong, China. We forecast a 31.7% growth in revenue to RMB 248.1m and a 21.4% improvement in net profit in FY07, and expect FY08 revenue and net profit to increase by 37.1% and 26.8%, respectively. Based on 12x FY08 PER, we derive a fair value estimate of S$0.535. We initiate coverage on Dutech with a BUY rating. (Lee Wen Ching)
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NEWS HEADLINES
- ST Engineering's ST Electronics (Info-Comm Systems) has entered into an agreement with Ituran Location & Control to acquire 93.96% of Telematics Wireless for about US$80m.
- STATS ChipPAC Ltd. is expanding its flip chip offering to provide customers a complete turnkey solution in China. Its operation in Shanghai will offer high volume, low cost, full turnkey flip chip solutions encompassing wafer bump, sort, assembly and final test.
- Keppel Corp's subsidiary Keppel FELS has secured a US$206m contract for a semi-submersible accommodation vessel from repeat customer Floatel International, expected to be delivered at the end of 2010.
- SMB United has increased its local order book with S$21m worth of contracts for the supply of switchgears and dynamic UPS (uninterrupted power supply) to a wafer fab plant, bringing its total Singapore order book to S$54m.
- Aussino Group Ltd has pumped in GBP500,000 to form a 50-50 JV with Hardy Amies International Ltd to set up Hardy Amies stores in China to target the luxury men and ladies fashion market.
- Thai Village reported FY07 net profit of S$2.62m (FY06 net loss of S$1.77m) despite a 4% YoY decrease in topline to S$38.3m, due to the closure of underperforming outlets both in PRC and Singapore.
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