GMG

GMG: DBSV upgrades GMG to HOLD from Fully Valued, as the recent share price decline now offers 4% upside to house revised post-rights TP of $0.125 (Prev $ 0.19). Lowers FY11 earnings by 6% to reflect softer margins but raised FY12-13F core earnings by up to +32% on
new capacity.

Catalyst for GMG will be the deployment of $312m net cash, mainly from the rights issue completed in Dec11, and timely execution of its expansion plans, as rubber prices may remain weak over the near term (on slower demand and seasonal peak in production). GMG intends to add 150k MT p.a. processing capacity in Thailand and Ivory Coast over the next two years, which will lift FY12-13F volumes by 12-31%