SIIC: CS expects continued profit growth from operations at a 48% CAGR for 2015E-17E, driven mainly by water treatment volume growth with unit profit improvement from plant upgrade. House maintains Outperform with a higher TP of $1.50 (from $1.30).
SIIC remains disciplined to grow with quality, in terms of project location, population flow, and higher potential for upgrade. CS expects SIIC to benefit from China's WWT plant upgrade, especially on the back of the 13th five-year plan.
The progress of the Longjiang acquisition and HK listing are still the key events for the stock. CS thinks Longjiang is under a due diligence study and awaiting approval by early 2016E, a potential addition that could boost earnings by 3-13% in 2016-17E.
House believes a HK listing is postponed to 1H16E.
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