Noble Group +1.5% to $2.07 on prospect of earnings boost from acqn of 2 Brazilian sugar cane mills for US$950m. Both mills generated a combined net profit of US$64.9m for FY10 ended April. While the puchase price is expensive at 25x P/E, DMG, which has a Buy call with a $2.58 target, views the move as positive given rising sugar prices will translate to stronger earnings prospects.
CIMB, which has an Outperform call with $2.60 target, cites the proximity of the 2 mills to Noble's existing sugar mills offers economies of scale, which should enable the company to raise the utilization of its newly completed export terminal in Santos. Noble will fund the acqn using internal resources. Resistance is tipped at $2.14.
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