XinRen

XinRen: Counter could see some interests, after Aluminium prices surged to a 2 yr high, with Credit Agricole forecasting gains of 4% in prices over the next 2 yrs, inline with global economic growth. Grp remains a Key beneficiary of rising Aluminium Prices, which will contributing to higher ASP’s, having similarly locked in raw material Alumina price at a fixed 17.1% of Aluminium price, giving it a cost competitive structure vs its peers…..

Management has guidance for 4Q Rev to exceed that of 3Q, which looks highly possible, on back of rising economic costs and increasing exoansion in grp’s fabrication plant, which will see fabrication capacity triple by 3Q11. …

We note that at current price, valuation appears pretty compelling, with stock trading at a conservative annualized 4.7x FY10E PE vs peers average of 21.2x and at 5.8x FY10E EV/EBITDA vs peers average of 11.5x, suggesting room for stock to rereate upwards.