Luzhou Bio-chem (S$0.325) - Downside risks remain high Although the fourth quarter is the company’s seasonally strongest quarter, the early signs for 4Q07 are unfavourable, with ASP for corn sweeteners sliding, while corn prices are increasing.
A poor harvest and robust demand for feeds is fuelling the rise in corn prices. If the early price trends persist, the company could be skating even closer to the breakeven mark in the 4th quarter. While we are keeping our FY07-09 EPS estimates intact for now, we see downside risks to our estimates if the current pricing situation persists.
We believe that the company’s smaller scale puts it at a disadvantage compared to larger competitors. Hence, we continue to peg our target price at a discount to the peer average of 5.3x CY09. Our target price remains S$0.29, still based on 4x CY09 P/E. Maintain Underperform.
Quick Takes
· FerroChina (S$2.21) - Targetting Southern China and Vietnam News of the Day
· China Farm equipment expands into farming truck business
· SGX puts secondary listings in new section online
· Radiance writes down Xiptech investment
· Ezion receives intent to charter 2 rigs
· Evergro shares to trade in Singdollars
· GuocoLand to develop 1st project in Vietnam
No comments:
Post a Comment