HL Asia: Credit Suisse maintains O/P, but reduce TP to $3.45 from $4.35. Expect demand growth to continue into FY11. Add that near term, sales outlook for Xinfei should remain challenging, as it pushes into Tier 1 and Tier 2 cities amid rising competition. Reduce FY11-12 earnings by 16-22% on less optimistic price and margin assumptions, but believe risk is on the upside, as demand rises ahead of expiry of China’s rural subsidy scheme in 2012…..
Add that grp has received a formal offer for its equity stake in the Karimun Island quarry, and could reap a gain. At current price, valuations appear compelling, trading at 9x P/E, vs other China white goods peers’ 15x, and diesel engine manufacturing peer Yuchai’s 10x.
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