We met up with Favelle Favco's (Favelle) management recently and are convinced that Favelle will be able to maintain its high single digit margin on its growing order book despite the fact that its tax incentive has expired in May-12. Further growth is expected from its latest 60% investment in China and its new service centre (expected by year-end) in Kemaman. For FY13, we are projecting a net profit of RM51.0m, even on the back of conservative purchase orders replenishment assumption of RM400m. Assuming 8.0x targeted PER on the fully diluted FY13 EPS, we derive a fair value of RM1.94 for Favelle. Our fair value (adjusted for the enlarged share base) implies around 12.8% upside to the current share price of RM1.72.