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FerroChina - Deep Discount
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punter2006
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21-Mar-2007 21:37
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Singapore-listed FerroChina gains; UOB Kay Hian sees deep discount 3/21/2007 SINGAPORE (XFN-ASIA) - FerroChina Ltd was higher on laggard buying as the stock is seen undervalued compared to shares of other galvanized steel manufacturers in China, dealers said. "FerroChina is trading at a prospective 2008 price-earnings ratio of five times versus its closest peer's 12.20 times. Given FerroChina's higher growth rate and return on equity, such a deep discount is not justified," UOB Kay Hian said in a note to clients. UOB rates FerroChina a "buy" with a target price of 2.35 sgd. On the back or rising production capacity, UOB said it expects FerroChina's net profit to grow from 269.0 mln yuan last year to 349.3 mln this year, and further to 659.80 mln next year and to 903.2 mln in 2009. "FerroChina has adopted an ambitious expansion plan to ride on the growing demand for galvanized steel, which is underpinned by growing consumption in downstream industries such as construction, automobile and home appliances manufacturing," it said. |
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