Sakari Resources: CIMB downgrade to U/p from Neutral with $2.47 TP. Note that SAR has outperformed peers by 10% in the past mth, prompting house to turn cautious on stock. Recent checks suggest that buyers are starting to adopt caution on pricing for fear of deteriorating economic conditions.
While valuations are not lofty at 9.7x CY12 P/E against peers, house fear that macro headwinds may drag down its valuations. During the last downturn, SAR touched a low of 3.6x P/E. House keeps estimates and $2.47 TP, but downgrade rating to U/p in view of its recent share-price appreciation. Derating catalysts include thermal coal-price declines and intensifying risks of a double-dip recession.