InnoTek’s attempts to diversify undervalued by the market

PRECISION metal components manufacturer InnoTek has fallen on hard times. Its share price, buoyed last year by expectations that the company would be able to grow its sales to Chinese electric vehicle manufacturers, has more than halved over the past year.

InnoTek has a substantial cash pile, making its stock look undervalued. But investors keen to avoid a value trap will be looking for a turnaround plan – which the company has, in the form of its efforts to diversify.

The mainboard-listed company issued a profit guidance on Jul 14, indicating that it would likely report a net loss when it releases its financial results in mid-August. It attributed this to increased labour and manufacturing costs, as well as higher raw materials costs resulting from ongoing disruptions in the global supply chain.