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
AEM2.2000.140
$ Alliance Mineral0.3100.030
AusGroup0.049-
Best World2.5300.010
China Everbright0.460-
China Sunsine0.6200.010
Chip Eng Seng0.740-
CWG Intl^0.170-
Cordlife1.0550.005
Dutech0.4900.010
Food Empire0.5950.015
Geo Energy Res0.3350.005
Golden Energy0.520-
$ GSS Energy0.1740.003
Heeton0.380-
Hiap Hoe0.720-
Hi-P0.6600.030
$ ISOTeam0.3900.010
King Wan0.165-
Lian Beng0.5350.005
Nordic0.330-
Oxley0.5550.010
$ Rex Intl0.064-
$ Resources Prima0.026-
Riverstone0.870-
Roxy-Pacific0.5100.010
Sunningdale Tech1.7250.055
Serial System^0.1840.003
Sino Grandness0.2350.005
Straco0.7900.030
Sunpower0.800-
Tiong Seng0.255-
$ Trendlines0.1520.001
Uni-Asia1.1000.020
ValueMax0.260-
XMH0.295-
Yamada Green Res0.480-
YZJ Shipbldg SGD1.1300.020
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