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
AEM Holdings3.0700.010
Alliance Mineral0.3500.010
AusGroup0.036-0.001
Avi-Tech Electronics0.460-
Best World Int.1.340-0.020
China Sunsine0.900-0.005
CWG International0.1500.002
DISA Limited0.014-0.001
Dutech Holdings0.340-
Federal Int. (2000)0.400-0.020
Food Empire0.6550.010
Geo Energy0.2550.005
Golden Energy0.385-0.005
GSS Energy0.1680.012
Heeton Holdings0.565-
ISOTeam0.340-
KSH Holdings0.780-0.005
Lian Beng Group0.700-0.010
Miyoshi0.075-0.001
Nordic Group0.5550.015
Oxley Holdings0.625-0.010
REX International0.054-0.001
Riverstone1.030-
Roxy-Pacific0.540-
Serial System0.165-0.005
Sing Holdings0.450-
Sino Grandness0.2050.005
Straco Corp.0.815-0.005
Sunningdale Tech1.8700.010
Sunpower Group0.5100.005
The Trendlines0.1480.001
Tiong Seng0.380-0.015
Trek 2000 Int.0.280-
Uni-Asia Group1.230-
XMH Holdings0.240-
Yangzijiang Shipbldg1.5200.010

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