Stock Upgraded: Celestial target price to 2.47!

DBS Equity Research has raised its target price for Celestial Nutrifoods to 2.47 sgd from 1.97 after the company posted upbeat quarterly results and announced plans to invest in a bio-diesel manufacturing joint venture. Yesterday, Celestial reported that its first-quarter net profit jumped 33. 5 pct year-on-year to 82.49 mln yuan, backed by growth in sales of health products. The company also said it has entered into a memorandum of understanding with Japan's Daiki Ltd to manufacture bio-diesel. Under the deal, Celestial and Daiki plan to establish a joint venture enterprise, with the former as the majority stakeholder. "Given the group's tripling of production capacity by the second quarter and bio-diesel prospects fuelling group earnings over the next few years, Celestial deserves a higher multiple of 15 times prospective 2007 price earnings (PE) ratio and a raised target price of 2.47 sgd. Its closest comparable, Pine Agritech is trading at 18 times prospective 2007 PE ratio," DBS said. At 11.40 am, Celestial was up 0.14 sgd or 8.24 pct at 1.84 with 6.73 mln shares traded.