UOB Kay Hian report  Valuetronics: Potential takeover candidate. CONVICTION CALLValuetronics – BUY with a price upside of 31.8% Analyst Brandon (Ng) initiated coverage on Valuetronics recently with a BUY and target price of $0.56. Valuetronics is trading at a compelling ex-cash FY16F PE of 2.6x with a dividend yield of 8.5%. In addition: a) Share price floor should be at S$0.30 - Valuetronics's net cash (at S$0.26/share) and holdings in short-term investable grade (BBB-) US$ bonds (at S$0.04/share) vs share price of S$0.425. Of noteworthy, Valuetronics generated S$0.07-0.12/share of free cash flow annually in the last two years, which could see its share price floor rise over time. b) Concerns of LED segment overblown. investors may see a profit recovery in FY17, driven by continued demand from the higher- margin ICE segment. c) In the light of the recent takeover offer for Chosen Holdings, investors may be taking a re-look at Valuetronics as a potential takeover candidate. Valuetronics Holdings-Conviction BUY For This Value Gem |
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