JPMorgan downgrades to Underweight from Overweight and slashes TP to $4.60 from $7.20, based on 14x forward PE. Note that stock is likely to underperform near term due to a regulatory overhang and competition in China; also cites an overly optimistic consensus earnings estimates and likely lackluster earnings momentum, while investors may accord a lower PE multiple for its intended deviation from the core business….
Reduces FY11/FY12 earnings forecasts by 5.3%/7.3% as the house lowers oilseeds crushing and consumer products margin assumptions. Add that grp's deviation from its core business may attract a conglomerate discount, while future property projects under its JV with Kerry Properties and Shangri-La "could see more capital reallocated to property investments than reinvested in its core agri-commodities business in future.
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