UBS maintained its purchase rating for Boer Electric (1685.HK), with a target price of HK$10.05 (corresponding to 23 times the expected price-earnings ratio for FY2011).

According to some sources, Boer Power has agreed to spend 62 million yuan to acquire special power capacitors in Wuxi. The company said the acquisition will help expand its upstream component production capacity, thereby improving its ability to control costs.

UBS said that in 2010, special power capacitors in Wuxi achieved revenue of RMB 85 million and net profit of RMB 16.8 million. As of the end of January, the net asset value was RMB 51.4 million.

UBS expects that special power capacitors in Wuxi will contribute RMB 20 million in profit in 2011 and RMB 30 million in profit in 2012. The corresponding contribution rate to earnings per share will be about 10%.

UBS said that considering Boer Power's high growth rate and merger and acquisition opportunities, it is reasonable for this stock to have a premium over other similar stocks around the world.

Boer Power fell 0.5% yesterday to close at HK$7.26.