Combine Will. Yesterday we highlighted that there has been strong support for companies announcing plans to do a dual listing in Hong Kong or Korea , as well as companies proposing to list depository receipts in exchanges overseas. One of the companies we highlighted was Sunmart (Not rated), which rallied sharply during afternoon trade, gaining 17% to S$0.24 by day’s end. Investors that are still keen to partake in this play might want to take a look at Combine Will (Buy, TP S$0.52).

Combine Will International Holdings Limited 
 

Main catalysts

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Earnings likely to see a significant improvement from FY09 with the introduction of a new customer for automatic soap dispensers as well as the recovery in the global markets. Its recent third quarter results have shown that the Group is on target to achieve a stellar FY2010.

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Korean listing should see upward movement to the share price as we are assuming a potentially higher PE valuation given by Korea . Listing in Korea opens the Group to the Korean market and potentially new customers from there, allowing the Group to further expand their customer base and reducing its reliance on its major customers.

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The Group being a vertically integrated manufacturer, providing one-stop solutions to its customers, create a natural barrier to entry. Its long running relations with their major customers make it even harder for new entrants as well as provide the Group with comfortable economies of scale. The high capital investments required seek to discourage the entry of new competitors.

Recommendation

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Combine Will looks on track to hit a very good FY2010. The industry sentiments remain strong and thus the business segments should continue to see growth. We initiate with a BUY call on Combine Will with a target price of S$0.46 representing a 48.4% upside from its last traded price of S$0.310.