Innovalues

Innovalues: Innovalues is profiting from USD strength, as 90% of its revenue is based on the greenback compared to 31% of its raw materials. Maybank-KE estimates a 0.7% gain to gross profit for every 1% appreciation in USD versus SGD. In addition, prices of stainless steel, its major input, are depressed by low oil prices, reinforcing efforts to improve margins. Maybank-KE expects FY14 core net profit to swell 118% to $14m. In 2015, the house is projecting 24% earnings growth, which could be further buttressed by the strong USD, giving Innovalues a competitive edge over its US-based rivals. The RMB strength should also hasten its productivity programmes in China to improve returns. On its growth plans, Innovalues is considering a new project for 2016 with an automaker. If this goes ahead, it will have to make a big investment in capacity. But given the potentially large orders and the start of a significant relationship, it could catapult Innovalues into the big league. Maybank-KE maintains its BUY rating with TP of $0.65. The company is scheduled to release its FY14 results end Feb.