• Two stocks in UOB Kay Hian's alpha picks portfolio are cash-rich and trades at an attractive 3X ex-cash PE -- China Sunsine and Valuetronics. • Their stocks have gained 71% and 29%, respectively, year-to-date. This chart shows Valuetronics' large and steady cashpile in the past 7 years:  • Valuetronics benefits from its diversified electronic manufacturing bases in Vietnam and China, handling global trade uncertainties and maintaining healthy margins. Sunsine, meanwhile, is the world’s largest rubber accelerator producer, commanding a 35% market share in China, 23% globally, enabling it to leverage scale for cost efficiency and pricing flexibility. • The robust financials of these companies have enabled them to provide reliable streams of dividends over the years.
Even after its stock price gain, China Sunsine has a trailing dividend yield of 4.7% (final FY24 dividend of 3 cents and 1HFY25 interim dividend of 0.5 cents). • Meanwhile, Valuetronics has a yield of 5.9% based on its 27 HK cent dividend for FY25 ended March 2025. • Read more about UOB KH's alpha picks .... |
Excerpts from UOB KH report
| Changes to our portfolio. For Sep 25, we introduce BRC Asia (BRC), which is expected to benefit from firm construction demand amid increased infrastructure spending, and YZJSGD which has seen recent new order wins and remains inexpensive on valuation. We take profit on CapitaLand Integrated Commercial Trust (CICT), ComfortDelGro (CD) and PropNex (PROP), following their recent price strengths. The revised portfolio remains tilted toward high-conviction small- and mid-cap names with visible earnings drivers.  |
| China Sunsine- Buy |
Analysts: Heidi Mo & John Cheong
• Global leader with scale advantage. Sunsine remains the world’s largest rubber accelerator producer, with an annual capacity of 117,000 tonnes and thus well ahead of Tianjin Kemai (~70,000 tonnes) and Yanggu Huatai (~60,000 tonnes), neither of which have expanded recently.
In our view, its scale advantage enables greater pricing flexibility and cost efficiency, supporting a 35% market share in China and 23% globally as of 2024.
Sunsine operates on a “sales and production equilibrium” model, expanding volume to maintain competitiveness.
This chart shows China Sunsine's large and growing cashpile in the past 10 years:
• Strong balance sheet and decent 4.4% yield. Sunsine remains debt-free with Rmb2,234m (approximately S$0.43/share) in cash as at 30 Jun 25, providing ample room for future dividends and potential share buybacks. 
Net assets per share stood at 451.3 Rmb cents (approximately S$0.80), with net cash per share at S$0.42.
Current ratio remains robust at 7.5x, highlighting solid financial flexibility.
• Maintain BUY with a target price of S$0.75, pegged to a PE multiple of 9.4x 2026F earnings, or 1.5SD above the mean PE.
The stock trades at an attractive valuation of 3x ex-cash 2026F PE.
Heidi Mo, analystSHARE PRICE CATALYSTS
• Events:
a) Production commencement for new capacities,
b) higher ASPs for rubber chemicals, and
c) higher-than-expected utilisation rates.
• Timeline: 6-12 months.
Analysts: John Cheong & Heidi Mo • FY26 outlook remains resilient. VALUE expects to stay profitable in FY26 (12 months to Mar 26) despite global trade uncertainties. Its Vietnam manufacturing base and China operations offer strong operational flexibility.  John Cheong, analystConsumer electronics (CE) revenue may decline further with the phase-out of a legacy customer, though growth from the entertainment-focused customer is expected to partially offset this.Industrial and commercial electronics (ICE) outlook remains mixed with steady demand from a key Canadian customer, while others take a cautious stance amid tariff uncertainty. • Vietnam expansion signals strong demand. VALUE is expanding its Vietnam facility by adding a fourth floor, increasing capacity by around 30% to support future growth. This reflects strong demand and rising contributions from new customers. • Robust cash position supports shareholder returns. VALUE maintains a strong net cash position of HK$1.1b (~S$180m), or about 65% of its market cap, with no debt. Despite a formal dividend policy of 30–50%, actual payouts have been consistently higher at 68%/64%/65% for FY23-FY25 respectively.  • Maintain BUY with a PE-based target price of S$0.83, pegged to 11x FY26 PE, which reflects 1SD above the historical mean. This accounts for stronger demand from four new customers and upcoming JV contributions. Management also plans to continue its HK$250m share buyback programme in FY26 (HK$107.1m utilised to date). VALUE trades at only 3x FY26 ex-cash PE and offers an attractive 6.8% FY26 dividend yield. SHARE PRICE CATALYSTS • Events: a) Higher-than-expected dividends and potential M&As, and b) proactive management amid market challenges. • Timeline: 6-12 months. |
 • Full UOB KH report here.• See also DBS Research's take: VALUETRONICS: Classic Value Play? It Offers Consistent Dividends, Robust Balance Sheet, Margin Upside |
