Pacific Andes ( Kim Eng Outperform)

Pacific Andes Holdings - Initiating Coverage - The protein diet: fish and nuts We initiate coverage on Pacific Andes Holdings (PAH). While the stock has staged a lovely run up in price recently, there is still delectable mileage left in it. The current valuation at 8x CY06 P/E is unjustified given its strong business fundamentals. It has good organic growth potential (it can easily manage more fish volumes or species). Being integrated across the supply chain, it can also offer clients value-added services. Managing large enough volumes, fish suppliers are also keen to maintain relationships with PAH. Finally, the company has the potential to engage in specialised logistics infrastructure to boost its margins. On the back of these, we initiate with OUTPERFORM and set a sum-of-parts target price of S$1.22, implying 13x core FY07 P/E.