Excerpts from analysts' reports
KGI Fraser analyst: Renfred Tay
Value/yield/recovery play; Maintain BUY. Although we have an unchanged view on FY17F, we fine tune our forecasts slightly with the updated outlook from management.
We also note that about S$0.39 of its stock price of S$0.525 comprises of its cash and bond holdings.
UOB Kay Hian analyst: Nicholas Leow
1QFY17 net profit fell 11.6% yoy to HK$29.6m, attributable to the exit from the mass market LED segment. Valuetronics is trading at 8x FY18F PE (ex-cash: 3.3x) with a potential dividend yield of 7.1%.
Maintain BUY and PE-based target price of S$0.60.
The company remains a very defensive manufacturing play with solid cash-generating characteristics and a resilient dividend yield.
Prudent balance sheet with zero debt. As of 30 Jun 16, net cash stood at S$0.34/share, up from S$0.22/share as at 31 Dec 16. Net cash/share forms about 60% of Valuetronics’ market capitalisation.
If we were to include available-for-sale (AFS) financial assets, net cash/share would have been S$0.37, or 72% of market capitalisation. AFS financial assets comprise mostly US$ investment grade bonds, giving a yield of 2-3%. The group continues to maintain a very prudent balance sheet with no debt.
Full UOB Kay Hian report here.