• BUY Entry – 1.91 Target – 2.30 Stop Loss – 1.75
  • FRKN is a technology manufacturer providing end-to-end solutions to global clients including ASML (semiconductor), Philips (medical), Siemens (medical), FEI (analytical), Seagate (industrial automation) and ThermoFisher (analytical). 
  • Share price correction overdone. Shares of FRKN have dropped almost 25% since peaking at S$2.52 in mid-September. We think the selling is overdone given that other Singapore-listed semiconductor stocks such as AEM and UMS have gained between 6-10% over the last month, with AEM even making a new high of S$5.35 yesterday. We acknowledge one key reason for FRKN’s share price weakness is due to margin pressure due to higher freight and component costs. However, we expect the pressure to be short-lived as the company adjusts towards higher value added projects. 
  • Largest customer is upbeat for 2022. ASML, FRKN’s largest customer, is upbeat on growth in 2022 in both the logic and memory segments of the semiconductor space. ASML expects net sales growth for 2021 to approach 35%. 
  • Consensus estimates are positive. There are 4 BUYS and 1 HOLD and an average TP of S$2.57, implying a 35% potential upside. Valuations are decent at 14x and 12x FY2021 and FY2022 EPS.