China MinZhong: Macquarie maintains O/p, with TP $2.35. Recommends Buy ahead of peak season earnings. 2Q12 earnings before market opens on 13 Feb.
Expect Minzhong to deliver rev of Rmb837m and adjusted EPS of Rmb0.41, during the seasonally strong 2Q, representing 54% and 48% YoY growth. Expect MINZ to grow organically 33% this year and 29% in FY13. The balance sheet is strong with virtually no net debt, yet valuations remain at distressed levels of 0.8x P/BV and 3.2x FY12E PER.
Target 7.4x FY12 PER is in line with its average level prior to the sector’s corporate governance scandals erupted in 2Q11. Believe MINZ’s growth and quality is well above sector average of 5.7x CY12. Think that next week’s results should prove to be a meaningful catalyst for further performance.
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