Thursday, September 30, 2010

Fuxing China

Fuxing China: DMG maintains buy with TP of $0.255 based on 6X PE ex-cash. Note that investors’ response was generally positive after recent road show hosted by them, citing that grp has several catalysts for potential re-rating….

Expects strategies of grp to propel them to dbl market share within nxt 5 years, to become the no.1 PRC zipper maker, with grp currently holding a 4% market share. Capacity is full at most lines, with order book visibility till Nov 10, with grp aiming to increase capex by FY11 to increase current 2400 tons of output/yr for production of ‘Super durable zippers’ where grp has just successfully acquired a patent…..

Notes that grp has current net cash position of RMB630m, translating to $0.16/share, and dividend yields of 4-5% over nxt 2 yrs should provide key share price support.

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