Valuetronics

Valuetronics > Buy

Maybank Kim Eng, March 22

March 23 close: S$0.95

Target Price: S$1.25

VALUETRONICS is a beneficiary of emerging demand for home "Internet of things" (IOT) and car connectivity through its smart-lighting customer and Aptiv. Both customers are domain leaders and should enjoy outsized growth in their markets, which are on the cusp of a takeoff.

These underpin our above-consensus earnings per share forecasts for FY18 to FY20. Strong cash flow should pave the way for 4.7 to 6.1 per cent dividend yields.

IOT bulbs and in-car connectivity modules account for the lion's share of our 13-32 per cent revenue-growth estimates for FY18 to FY20. The IOT lighting market should grow by a 21.5 per cent compound annual growth rate in 2018 to 2023 to US$21b, according to research firm MarketsandMarkets. As an early mover, we expect Valuetronics' lighting customer to benefit from rapid market growth in IOT bulbs.

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