China Animal: Kim Eng initiates coverage with Buy Call and TP of $0.48, pegged at 15x FY11F PER, a discount to its peers average of 23x. Note that while FY10 net profit may be hurt by certain one-off expenses, remain confident on grp’s longer-term growth prospects given its leading market position in animal drug manufacturing and distribution….
Highlight that the recent approval by China’s Ministry of Agriculture to commence commercial production and sale of its animal foot-and-mouth disease (FMD) vaccines should underpin its earnings growth in the medium term…
Add that grp has submitted application for the dual primary listing of its shares on HKSE by way of introduction and believe the process would not take more than four months. Which could possible see grp be listed on HKSE by yr end....
Further keen interest from institutional funds also points to good support on stock, with Investment and advisory firm Blackstone recently made a strategic investment by subscribing for US$40m in principal amount of convertible bonds at par and 20m new shares at the issue price of $0.35 per share for a consideration of S$7m and mutual fund group FMR LLC has also been buying in the open market, raising its stake to 9.2%.
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