Innovalues

Innovalues: UOB KAy Hian has an unrated rpt, where the house highlights that Innovalues is currently trading at 10.1x FY14F PE. Based on Bloomberg consensus, the 12-month target price is S$0.49, which translates to a 19.5% upside from current level. Revenue from the automobile segment has grown from 10% of sales in FY05 to 76% in FY13. Focusing on the critical components of a car, Innovalues manufactures mostly components that deal with the safety, energy-saving or environmental protection (emission) features of a car (eg the electronic stability control). Innovalues has been paying dividends since 2011. With a positive turnaround in 2012, it has also increased its dividend payout from $0.006/share in 2011 to S$0.012/share in 2012 and 2013. With 1H14 proving to be another exceptional year, believe there is potential for an increase in dividend payout. Innovalues generated very strong free cash flow in the last three years (2011-13 free cash flow yields: 8-12%), underpinning its ability to pay out generous dividends and improve its balance sheet.