DMG cuts Oceanus target price to $0.43 from $0.515 based on 12.8X FY11 P/E after lowering FY11 earnings forecast by 30% to assume lower selling prices. Notes 1Q10 average selling price was down 33% on-quarter and supply of caged abalone lower due to higher-than-expected mortality rate. Adds restaurant business, comprising 20 restaurants across China, Singapore, continues to bleed due to high rental costs. Expects restaurant business to lose Rmb11-13m in next two years.
But still keeps Buy call citing recent purchase of two land parcels will enable Oceanus to increase number of tanks to 35,000 by end-FY10 from 25,055 now, allowing it to rear bigger abalones with higher profit margins.
No comments:
Post a Comment