Excerpts from UOB Kay Hian report

INNOVALUES

Innovalues
Share price: 
98 c
Target: 
$1.06

Maintain BUY with upward potential in target price due to M&As. While the upside is less than 10%, we see potential M&A interest driving share price further.

In Dec 15 alone, we saw two precision engineering-related takeover deals in the region. IPE Group in Hong Kong was acquired at a trailing PE of 17.4x.

check1.16Quality control: Visual inspection of all products to ensure they are in accordance with customers’ requirementsThis multiple would imply a fair value in excess of S$1.20 for Innovalues’ trailing 12-month PE ratio. Innovalues’ 2015 favourable net cash position, free cash flow-generating capabilities, strong management team and potential cost-cutting measures make for a prime leveraged buyout target, in our view.

Target price of S$1.06 is based on DCF methodology (COE: 10%, terminal growth: 0%).

♦ CHINA AVIATION OIL
China Aviation Oil
Share price: 
$1.035
Target: 
$1.56

• Five-year plan to double profits through organic growth and M&A acquisitions. Management has shared its aim of doubling profits to US$120m by 2020 through both organic growth (as it establishes itself overseas in Europe and the US) and M&As.

They intend to deploy their war chest of US$228m (S$319m) in net cash (around 35.6% of market cap) to acquire more synergistic fuel-related assets.

Maintain BUY with S$1.56 target price based on a DCF model (using 9.5% WACC and 0% terminal growth) with 50.7% upside to current price levels. The target price implies a reasonable 2017F PE of 12.0x and P/B of 1.4x.

 

Full report here. 


Share Prices

Counter NameLastChange
AEM0.9400.010
Best World1.5950.060
China Everbright0.450-
China New Town^0.0710.001
China Sunsine0.510-
Chip Eng Seng0.665-
CWG Intl^0.165-
$ CNMC Goldmine0.430-
Cordlife0.9650.005
Dukang0.680-
Dutech0.480-
Food Empire0.5700.030
Geo Energy Res0.220-
Golden Energy0.5050.005
$ GSS Energy0.0840.001
G Invacom0.155-
Hiap Hoe0.730-
Hi-P0.485-
$ ISOTeam0.415-
King Wan0.175-
Lian Beng0.460-
Midas0.225-
Nordic0.2850.005
Oxley0.480-
Regal Intl0.145-
$ Rex Intl0.069-
$ Resources Prima0.040-
Riverstone0.8700.010
Roxy-Pacific0.520-
Sunningdale Tech1.130-
Serial System^0.1390.003
SingHoldings0.315-
Sino Grandness0.2700.010
Straco0.7950.015
Sunpower0.5750.015
Tiong Seng0.230-
$ Trendlines0.1570.001
Uni-Asia1.020-
ValueMax0.250-
XMH0.290-
Yamada Green Res0.480-
YZJ Shipbldg SGD0.8300.010
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