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
AEM2.6300.410
$ Alliance Mineral0.315-
AusGroup0.048-
Avi-Tech0.4400.010
Best World2.5500.030
China Sunsine0.7550.015
CWG Intl0.179-
Cordlife1.015-
Dutech0.500-
Food Empire0.580-
Geo Energy Res0.320-
Golden Energy0.460-
$ GSS Energy0.1630.004
Heeton0.470-
Hiap Hoe0.705-
$ ISOTeam0.380-
KSH0.8700.010
Lian Beng0.595-
Nordic0.380-
Oxley0.5750.005
$ Rex Intl0.0590.001
$ Resources Prima0.0260.002
Riverstone0.8650.005
Roxy-Pacific0.520-
Sunningdale Tech1.6950.030
Serial System0.176-
Sino Grandness0.2450.005
Straco0.780-
Sunpower0.7550.015
Tiong Seng0.2650.005
$ Trendlines0.1530.002
Uni-Asia1.145-
XMH0.310-
Yamada Green Res0.450-
YZJ Shipbldg SGD1.1450.025
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