CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan have lowered their target price on TDCX, while keeping their “add” call, following the service firm’s 1QFY2022 earnings.
“Despite near-term headwinds, we believe structural trends remain intact – outsourcing remains the preferred way for New Economy economies to grow, as they can remain agile and scale operations at a fraction of the cost of building in-house resources and capabilities,” state the analysts in their May 26 note.
The Singapore-based company was listed in New York last October and has reported core earnings of $20 million, up 35% y-o-y for the quarter, which was in line with expectations. Revenue was up 27% y-o-y to S$152 million, as it continued to win over new clients.
TDCX, headed by Laurent Junique, provides outsourcing services for companies in areas like customer management.
However, the analysts have lowered their growth assumptions and as such trimmed their FY2022 and FY2024 earnings per share forecast by 4.9% to 5.8%. Their new target price of US$18 – down from US$24 previously – is pegged to 14.6x EV/EBITDA.
They see potential reasons to re-rate the stock to include pickup in revenue growth for 2HFY2022 and also earnings accretive acquisitions. Key risks, meanwhile, include prolonged economic uncertainties.
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TDCX shares closed on May 25 at US$12.15, down 10.4% for the day and down 36.29% since it started trading.
