Frencken Group Ltd Image source: www.frenckengroup.com
Frencken Group Ltd Daily, 10-mth chart with valuation metrics
Chart source: Tradingview
Frencken Group Ltd is a Singapore-based company that specializes in Mechatronics and Integrated Manufacturing Services. The company is a leading player in the design and manufacture of complex electro-mechanical assemblies and automation systems for original equipment manufacturers. In addition, it specializes in the manufacturing of plastic components and printed circuit board assembly for modules and finished products. The Mechatronics segment is the company's largest revenue generator.
Investors should take note that Frencken Group's net margin is expanding, which is usually a good sign. The company has also shown predictable revenue and earnings growth, with revenue growth of 10.5% per annum over the past 5 years and net income growth of 30% per annum over the same period.
Furthermore, management has been rewarding shareholders with more dividends over the years, with dividends growing from S$0.012 per share in 2017 to S$0.41 per share in 2022. This is a positive signal for investors as it shows the company's commitment to returning value to its shareholders.
One risk factor to look out for is the company's increasing debt levels over the years. However, Frencken Group's strong balance sheet currently means that this debt is still at an acceptable level. It is important for investors to monitor this debt level to ensure that it does not become a burden on the company's financials.
In addition to company-specific risks, there are also macro-related risks that investors need to be aware of. These include the risk of an inflation-induced recession and geopolitical tensions between the US and China affecting market sentiment. Investors should keep an eye on these factors and adjust their investment strategy accordingly.
From a technical analysis perspective, Frencken Group's recent breakout above the Cup & Handle formation resistance of $1.20 with higher than average volume may signal the start of a new uptrend. The next two resistance levels are at $1.30 and $1.60, while support levels are at $1.10 and $0.95. This could be a good opportunity for investors to consider adding Frencken Group to their portfolio.
Other risks factors to note:
Do note Frencken is reporting its FY2022 Full Year results on 27 Feb 2023, after trading hours. There may be earnings reporting risks. Also the bullish Cup & Handle Pattern did NOT break out of neckline authoritatively yet.
Thus, do trade with caution!
Overall, Frencken Group is a promising investment opportunity for investors looking to invest in a Singapore-listed stock. The company's strong performance and consistent growth, along with its commitment to rewarding shareholders with dividends, make it an attractive investment option. While there are some risks to consider, the company's strong balance sheet and recent technical breakout suggest that the stock could be a strong performer in the coming years.
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Disclaimer:
This is an opinion piece. Please always do your own due diligence on the company's fundamentals & assess if the Fundamental / Technical analysis opinions are applicable to your trading/investing needs.
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