Mewah: Standard Chartered Initiate Coverage on Mewah with OutPerform rating and $1.10 TP. View the decline in Mewah’s share price from a high of $1.20/sh on 18Jan11 as misplaced and overdone. Add that grp is not a palm oil price play and asset-less earnings exposure to MENA. Estimate only 10% exposure to MENA, and capture this exposure by applying a 10% discount to theoretical valuation….
Note that grp is the #2 refiner in Malaysia (14% share), the #1 branded consumer pack entity in West Africa, and an important alternative to an industry increasingly populated by fully integrated entities. Despite operating in the palm complex, Mewah’s earnings and growth, in contrast to plantation companies, are not price dependent. Vol, structure and mix are key, with IPO funding gives it the capacity to improve on all fronts.