Innovalues

Innovalues: AmFraser initaites coverage with Buy call and TP $0.465. The house notes that The automotve market in China and US has rebounded and been growing steadily after the global financial crisis and are expected to continue growing. Notwithstanding new customer acquisitions, a recovery in the European automotive market and the recent M&A conducted by its exisitng key customers will also add a further boost to Innovalues in the coming years. Recently, its directors, including Chairman/CEO Mr. Goh Leng Tse, have been buying up shares from the open market. Over the last 2 months, about $1m was spent by these directors to acquire 4.7m shares (ave. price of $0.22) from the open market. Innovalues is currently trading at 7.2x FY14F P/E with an expected CAGR of 38% for the next three years. Given its growth prospects, its high ROE, its transformation in sector focus, renewed balance sheet strength and higher prospective dividends, we believe it would be undemanding to value Innovalues at 10x FY15F P/E, which translates to a target price of $0.465.