China XLX Fertiliser

China XLX Fertiliser: CIMB upgrades to Neutral from underperform on the view negatives are priced in, noting the stock's 43% fall since Jan 7, when the house downgraded it. Says XLX has been maintaining above-industry margins, while coal-cost pressure and production declines due to power cuts should be over for now. Notes margins and earnings in the next two quarters should be marginally better…

Keeps unchanged its earnings estimates and target price of $0.39, at 7X 2012 P/E and a 50% discount to peers. Expects near-term catalysts from improving urea ASP and stabilizing margins for key product segments, although longer term, remains wary of costlier coal input and fund-raising needs from aggressive expansion. Adds it may be a positive now that dilutive equity-raising to fund this huge capex would not be considered, given current share-price weakness. Shares are +4.3% at $0.36.