Friday, May 12, 2006

Stock Buy Call: Jiutian fair value of 0.85 sgd by DBS Equity Research!

DBS Equity Research said it has initiated coverage of Jiutian Chemical Group Ltd, a China-based manufacturer of fine chemicals that listed on the Singapore Exchange last month, with a "buy" rating and a fair value of 0.85 sgd per share. "Based in Henan, Jiutian Chemical manufactures DMF, methylamines, methanol and gases. Its key product, DMF, is used mainly to make polyurethane for a wide range of applications including packaging, automotive and construction," DBS said. With demand for DMF in China seen growing more than 20 pct a year in the next few years, DBS said Jiutian is tripling its production capacity. This capacity expansion should help Jiutian achieve a compounded annual growth rate (CAGR) for earnings of more than 50 pct up to 2008, it said. DBS expects Jiutian's net profit 58.7 mln yuan this year and 83.10 mln next year from 20.60 mln yuan in 2004. At 11.14 am, Jiutian was up 0.04 sgd or 5.44 pct at 0.775 with 20 mln shares traded.

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