Rubber: Deutsche initiates on sector, which has been “under-researched on the sell side”. Says despite climbing 80% since early 2010, expects natural rubber prices to stay lofty over the next 2 yrs. Notes yrs of underinvmt have restricted output from responding sufficiently to growing demand. Adds, aggressive competition from the palm oil industry should limit supply growth, while demand is rising due to the growing tire market...
Forecasts price to remain elevated at US$5.00-5.30/kg in 2011-12 (vs spot: US$5.20; YTD: USD5.60).
Sri Trang: in its rubber report, Deutsche initiates at Buy with target of THB 35 (S$1.42). Says Sri Trang is the global no. 1 natural rubber producer with 8% of the world’s total natural rubber consumption. Notes, with strong demand coming from the automotive industry, especially China and India, Sri Trang, as one of the largest rubber processors, should be one of the prime beneficiaries...
Expects prices to remain strong until 2012, and points out that history shows STA enjoys stronger profitability and gross margins when rubber prices rise. Adds, stock trades at 7.7x 2011 PE, which is well below industry average.
GMG: while not mentioned by Deutsche, stock may get spillover interest following the rubber sector report. GMG is one of the world’s only few listed pure rubber play, which has presence from plantation, processing to distribution. Possible catalyst from its recent acquisition of Teck Bee Hang (Thai processor) has doubled its processing capacity. Stock trades at 17.6x trailing P/E, but valuations are expected to narrow to 8.3x FY11E consensus P/E. Stock has 1 Buy rating with TP $0.46.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment