With vast opportunities opening up in the installation of China's solar market, Swing Media has recently announced a fund raising exercise. The recent dip in the share price following the placement presents a good buying opportunity. The counter is currently trading at an attractive 0.2x FY13P/B. Reiterate BUY, with a lower TP of SGD0.23 based on 0.5x (industry average) FY13 P/B.

China, the world's largest solar market. Forecasted to unseat Germany as the world's largest solar market, China will become the key growth driver in annual global installations, as newly appointed premier Li KeQiang pledge to tackle environmental problems. The country has recently revised its 2015 plans to consume more solar power, up 67% to 35 gigawatts from a previous goal of 21 gigawatts.

First mover advantage. The Chinese government typically achieve its strategic goals through its State Owned Enterprises. PetroChina, the largest oil and gas producer and distributor in China, is one such SOE that Swing Media has an entrenched relationship with. Lucrative orders to install patented solar/wind powered energy systems in 300 of these petrol station, with an approximate profit of RMB100,000 per station, is just the tip of the iceberg. There are more than 100,000 petrol stations in China. Being the first mover, we believe that the group is in favourable position to unlock this potential strong growth in orders.

Placement to meet the rising working capital needs. To better position for this enormous opportunity in the solar market, the company has
successfully raised SGD10.9m through a private placement. It issued 73,880,000 new shares at SGD0.148/share. The proceeds have reduced the net gearing from 13.9% to 6.9%, thereby presenting a better state of financial strength to seize the growth opportunities.

Source: RHB