XinRen/HongQiao: BNP Paribas initiates on China HongQiao with Initiate with Buy Call and HKD11 TP. Believe that grp will be a capacity story rather than a price story, given the limited hope of a strong rally and the sharp decline in the domestic aluminium price. Tip grp to deliver 40.1% earnings CAGR in 2010-13, helped partly by moderately improved aluminium prices…..
We note that at current price, Hong Qiao trades at 4.6x FY12E P/E vs much smaller peer XinRen’s 5.5x FY12E P/E and vs global peers average of 12.6x, which is unwarranted in our view.
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