Yongmao Holdings: CIMB initiates coverage with Buy Call and $0.17 TP.
Note that with urbanisation rate still below developed countries, growing infrastructure needs and mass housing projects to soothe the populace, demand for towercranes is expected to remain strong over the next few years and Yongmao has a new plant ready to ride on this demand.
TP pegged at 30% liquidity discount to its average forward P/B of 1.07x. For the moment, house have penned in mgt’s aspiration of a 20% payout ratio for div. This remains subject to cash flow clarity with the new plant in operation. If management reads the market correctly, earnings will see significant growth, especially in FY13 and FY14.
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