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Hot stock: Valuetronics up 9.6%

SHARES in electronics manufacturing services provider Valuetronics rose 9.6 per cent, or S$0.065, to S$0.745 apiece as at 9.45am on Monday. 

About 6.75 million shares changed hands, making it one of the top 20 stocks on the Singapore bourse - both by value and volume - in the early morning trade. 

Citing unusual price movement in the shares, the Singapore Exchange (SGX) had on Friday issued a query to the company. 

In response, Valuetronics said that it is in compliance with mainboard-listing rules, and is unaware of any information concerning the firm not previously announced, which might explain the spike in the trading of its stock. 

It added that while brokers CGS-CIMB Securities International and Maybank Kim Eng have issued research reports on the company's shares, it is not the firm's policy to comment on such reports. 

CGS-CIMB is maintaining its "add" rating on the stock with a target price of S$1.10, while Maybank has a "buy" call on the stock with a target price of S$1.25. 

CGS-CIMB and Maybank both predict that it was "too early to dim the lights", and that there might be "light at the end of the tunnel" for the counter yet, with the latter of the view that Valuetronics could stand to gain from the emerging demand for home IoT (Internet of Things) and car connectivity from its smart-lighting and automotive customers.

Separately, RHB on Monday issued another research note, maintaining its "buy" rating on the counter, but reducing its target price to S$0.96 from S$1.05 previously. This came on the back of "weaker sentiment globally across the electronics and semiconductor sector", the broker said. 

RHB analyst Jarick Seet noted that Valuetronics share price has slumped 25 per cent since its Dutch MNC (multinational corporation) customer reported a Q1 2018 earnings miss, due to weak sales at its home lighting division. Nonetheless, RHB is of the view that the selldown is overdone, as the firm's fundamentals and growth remain intact.

"Going forward, we expect Valuetronics to continue recording strong growth for the remaining quarters of FY18, due to healthy growth drivers at both its business segments, especially its ICE (Industrial & Commercial Electronics) and automotive segments," RHB said.

"We believe the recent share price correction presents a good buying opportunity at an attractive FY18F yield of 6.6 per cent."

The broker warned, however, that key risks to this view include economic slowdown, forex risks and raw material price fluctuations. 



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