Q&M: CIMB is bullish on Q&M, saying earnings from China will underpin an EPS CAGR projection of 20% over FY15-17. This has already been cut to adjust for share dilution from a rights issue, but raises TP to $0.78 (based on a slightly higher 41x CY16 PE)
The optimism is thanks to Aidite, which despite only operating for five months in FY14, had already contributed 15% of total earnings, driven by the addition of one operation line (at end FY14, Aidite operates two lines).
For Aidite, stronger performance is expected going forward, given: 1) they’re planning to build a new plant, doubling the capacity by end of 2015 and 2) strong distribution channel.
The only qualm is that Q&M has a 51% stake, and there will be down time when shifting to new facility.
At the same time, Q&M had issued a $60m MTN at 4.4% last week, which CIMB views could be used for further M&A.
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