Sinomem reported its Q3-2009 results last Friday with revenue higher by 26% to S$31.7mn and net profit up by 263% to S$5.1mn. With 9 month net profit at S$15.8mn, the Company is comfortably ontrack to meet my FY2009 forecasts of S$20mn. Gross cash is now S$89mn from S$67mn following the placement of new shares at S$0.62 which are more than enough to redeem its convertible notes of S$57mn.
Its recent BOO contract for municipal water in China shows the transformation into both a manufacturer as well as an operator. This will provide a more stable recurrent income stream and like Hyflux will allow the company to enjoy a higher nominal PER valuation. I still like the stock. It remains in my stock pick list with my price target unchanged at $1.00. The current price of S$0.55 is also attractive as its below the price of its placement shares of S$0.62.
