Excerpts from analysts' reports on Innovalues

CIMB says 'hold', target price 91 cents

Innovalues
Share price: 
90 c
Target: 
91 c

Analysts: Ngoh Yi Sin & William Tng, CFA

■ 1H16 sales of S$57.4m in line with our/consensus full-year forecasts at 45%.


■ Supported by steady margins, 1H16 core net profit was also in line with our expectations, at 45% of our FY16 forecast, but below consensus at 41%.

check1.16Quality control: Visual inspection of all products to ensure they are in accordance with customers’ requirements.  NextInsight file photo.Management sees good growth in key AU and OA customers’ orders for FY16-18. 

■ Cash-generative, FY16-18F dividend yields of 4.5-5.3%, with potential M&As. 


■ FY16-18 forecasts unchanged, but EPS estimates and DCF-derived TP fell marginally due to enlarged share base. Maintain Hold recommendation.

Full report here. 


♦ Maybank Kim Eng says 'buy', tp $1.15
Innovalues
Share price: 
90 c
Target: 
$1.15

Analyst: Gregory Yap

At c.20% off the peak, Innovalues ticks all the boxes for a fundamental buy.

Trading at <11x FY17 P/E (>20% below peers), we forecast 30% core EPS growth with 4-5% yield this year. 

2Q16 confirmed an improving sales trend with better margins. Catalysts lie in dividend upside and a potential 30% takeout premium.

No interim dividend was declared this time due to on-going M&A discussions, which suggests talks are at an advanced stage. BUY, TP SGD1.15 @ 13.5x FY17 PE, in line with peers.


Full report here. 


DBS Vickers says: Upgrade to BUY with a higher TP of S$1.07

Analyst: Paul Yong, CFA

Innovalues
Share price: 
90 c
Target: 
$1.07

Upgrade to BUY with a higher TP of S$1.07 as we roll forward our earnings base to FY17F; current valuation appears attractive for a potential M&A play.

Following 2Q16 results, which were largely in line with our expectations, we only trim our estimates for FY16F/17F slightly by 0.8%/4.3% as we remain cautiously optimistic of a stronger 2H16.

After rolling forward our earnings base to FY17F (from blended FY16/17F previously), we arrive at a higher TP of S$1.07, which offers potential upside of 19%.

As prices have corrected by almost 20% over the past month - from a high of S$1.11 to S$0.895 currently, we see current valuation of 10x FY17F PE as attractive for a potential M&A play.

Full report here.


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