XinRen: Chalco announced that aluminum prices are likely to rise more in 2011 than last yr and expects to report a bigger profit for 2011 than for 2010. Co. notes that they see a bubble in copper prices now but is still optimistic about them, in addition to aluminum prices…
News would likely be positive for XinRen who derives more than 70% of its rev from smelting aluminum and is a key beneficiary to rising prices. We note that at current price, XinRen trades at 8.9x FY10E P/E vs the peer average of 21.2x; and at 5.9x FY10 EV/EBITDA vs peers’ 11.5x. The more than 50% discount in valuation is unwarranted in our view, and suggests room for XinRen to rerate upward
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