Yongnam: Citi Initiates coverage at Buy with $0.36 TP based on 8x FY12E P/E, a slight premium to grp’s historical and peer average of 7x. Investment thesis is based on higher-than-expected earnings growth (11% > FY12E consensus, strong mkt positioning amid a positive industry trend and compelling valuations at current 6x FY12E P/E.
Add of downside protection from replacement value of grp’s strutting assets (>70% of mkt cap). The share price has been range-bound at $0.20-0.30 since mid-09, but improving fundamentals could enable a sustained breakout to the upside. Potential near-term catalysts include contract wins from DTL3 ($100mn; est announced by end-Sep 11) and the Zhuhai-Macau-HK bridge project (S$100mn; by year-end)
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