Stock Buy Call: Hong Guo fair value raise to -/95 by JP Morgan!

JP Morgan said it has initiated coverage of China-based shoemaker and retailer Hongguo International with a "buy" rating and fair value of 0.85 sgd per share. "We see Hongguo as an undervalued and under-covered Chinese retailer listed in Singapore," JP Morgan said. "Sustainable and possibly improving margins should drive earnings growth and an appreciation in returns on capital, which we believe would drive a continued re-rating of its stock price," it said. JP Morgan said it expects Hongguo's net profit to rise from 71 mln yuan last year to 90 mln yuan this year and 117 mln yuan next year. At 10.28 am, Hongguo was up 0.04 sgd or 8.25 pct at 0.525 with 3.94 mln shares traded.