Kim Eng maintains BUY recommendation with TP of $1.22. Despite mkt jittery over the delays on some of the proposed HK dual-listings, we believe the concerns are unfounded. Based on our recent conversation with mgtm, we understand that the status of the dual-listing plan remains unchanged though it will also have to take into account the overall market condition, given the size of the proposed offering (300m new shares).
The recent share price pull-back has created a more attractive valuation gap with its peers, (17X current year PER versus 22X average for HK peers). This should facilitate better demand for the offering. Operationally, capacity expansion is on track, with a 3rd extrusion line already producing and a 4th one undergoing final tweaks. Mgt also shared that activities at its JV, Nanjing Puzhen Rail Transport has been visibly ramped up, which should improve associate contribution going forward.
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