GSS Energy weakness offers good opportunity to buy, RHB says

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The current weakness in shares of GSS Energy offers a good opportunity to buy at lower levels, RHB said, pointing to a positive outlook after a visit to the Batam factory.

“With a positive outlook ahead affirmed by its recently implemented dividend policy, we think GSS is currently at an inflection point,” RHB said. “At its current share price level, the stock is significantly undervalued. It also provides a unique opportunity for investors to ride on the manufacturing boom and the oil price recovery.”

RHB noted the Batam factory is operating at more than 80 percent utilization and the company has earmarked a larger site to shift to next year to cope with a 10-20 percent on-year rise in additional orders from new and existing customers.

It said the company’s expertise is in high-precision engineering, with high quality standards, which has enabled it to secure blue chip names such as Phillip and Panasonic as clients, as well as being the only Singapore-listed manufacturer to have Lego as a customer.

“In addition, we also expect it to produce and sell oil by the first half of 2018; it is likely to benefit from the rising trend in oil prices,” RHB said in a note this week.

It kept a Buy call with a S$0.25 target price.