Innovalues

Innovalues: Maybank-KE highlights that the recent share price weakness opens up buying opportunities, with management still remaining bullish in their recent meetings, maintaining its guidance for 10-15% revenue growth and 28-30% gross margin.

The house recently met with management to discuss the company’s outlook and investors’ concerns, which appear centred on: 1) the fall in CNY; 2) weaker China auto sales; and 3) the fallout from Tianjin’s port explosion in mid-Aug 2015.

Weakness in China’s auto sales in recent months did not faze management as it deemed this the result of the stock-market rout. Moreover, its customers primarily use China as a production base
for the US and European markets. In this light, CNY devaluation will benefit both its customers and Innovalues.

Innovalues is also a net beneficiary of USD strength against SGD and its other operating currencies, MYR, CNY and THB, Finally, management also updated that the Tianjin port explosion has not affected Innovalues or its customers.

With its recent share-price decline, core P/E has retreated to even more attractive single digits versus its 26% 3-year earnings CAGR. Yields are also decent at 5%.

Overall, Maybank-KE is maintain its Conviction Buy on the stock with a TP of $1.18.