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
AEM2.5500.030
$ Alliance Mineral0.2700.010
AusGroup^0.0470.001
Avi-Tech0.490-
Best World1.3400.010
China Sunsine0.8200.020
CWG Intl0.1450.003
Dutech0.380-
Federal Int0.390-
Food Empire0.6450.015
Geo Energy Res0.265-
Golden Energy0.3950.005
$ GSS Energy0.1480.003
Heeton0.475-
$ ISOTeam0.350-
KSH0.7350.020
Lian Beng0.610-
$ Miyoshi0.0670.002
Nordic0.420-
Oxley0.5450.005
$ Rex Intl0.0450.002
Riverstone1.0900.010
Roxy-Pacific0.535-
Sunningdale Tech2.0900.030
Serial System0.179-
Sino Grandness0.1830.027
Straco0.8600.010
Sunpower0.6400.030
Tiong Seng0.3000.010
$ Trendlines0.140-
Uni-Asia Grp1.3650.015
XMH0.2500.100
Yamada Green Res0.400-
YZJ Shipbldg SGD1.6000.030
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