Broker Name: CGS International Securities
Date of Report: November 17, 2025
Excerpt from CGS International Securities report.
Report Summary
- Frencken Group’s 9M25 revenue grew 12.5% year-on-year to S\$642.8m, mainly driven by the mechatronics segment, but net profit rose just 9.1% due to a lower gross margin.
- Management is slightly less optimistic about the second half of 2025, expecting revenue to be marginally lower compared to the first half, citing volatile geopolitical conditions, supply chain disruptions, and moderating semiconductor demand in Europe.
- The target price is lowered to S\$1.72 (from S\$2.06) after cutting FY25-27 EPS forecasts by 4.2-7.8%, reflecting a likely slowdown in the semiconductor segment’s growth for FY26-27.
- Despite near-term challenges, the long-term outlook is positive with expected EPS growth of 8-10% for FY26-27, driven by the semiconductor segment and potential catalysts such as new products and better cost controls.
- Key risks include further cost escalation and weakening demand in the semiconductor business; customer concentration remains high with three key customers contributing over half of group revenue.
- Frencken continues to strengthen its ESG profile, improving scores in environmental, social, and governance metrics, and maintains strong occupational safety records.
- Peers in the sector show higher average valuations and growth, but Frencken maintains stable financials, a solid balance sheet, and increasing free cash flow.
Above is an excerpt from a report by CGS International Securities. Clients of CGS International Securities can be the first to access the full report from the CGS International Securities website: https://www.cgs-cimb.com
